Answered

Jaymal is the director of club operations for five military bases in Florida. He has just received year-end income statements for each base. Information from the revenue and labor portion of those statements is shown below.

Jaymal wants to use the current year's data to create next year's budget. Assume that Jaymal is happy with his labor productivity in each unit and that both wages and revenue in each will increase 2 percent next year. Calculate how much Jaymal should budget for revenue and labor in each unit. Also, calculate what Jaymal's labor cost percentage will be for each unit if he meets his budget.

\begin{tabular}{|l|c|l|l|l|l|}
\hline
\multirow{2}{*}{
\begin{tabular}{l}
Projected increase in wages: 2\% \\
Projected increase in revenues: 2\%
\end{tabular}
} & \multicolumn{2}{|c|}{This Year's Results} & \multicolumn{3}{|c|}{Next Year's Budget} \\
\cline{2-6}
& This Year's Labor Cost & This Year's Revenue & Projected Labor Cost & Projected Revenue & Projected Labor Cost \% \\
\hline
Pensacola & \[tex]$285,000 & \$[/tex]980,500 & & & \\
\hline
Daytona & \[tex]$197,250 & \$[/tex]720,000 & & & \\
\hline
Fort Myers & \[tex]$235,500 & \$[/tex]850,250 & & & \\
\hline
Tampa & \[tex]$279,750 & \$[/tex]921,750 & & & \\
\hline
Miami & \[tex]$1,190,250 & \$[/tex]3,720,000 & & & \\
\hline
\end{tabular}



Answer :

GinnyAnswer
Let's analyze the income statements and projected increases step by step to help Jaymal create his budget for next year. There are five military bases with data provided for each base. The increases in wages and revenue are projected at 2% for the following year.

First, we need to calculate the projected labor costs and revenues for each unit by increasing the given figures by 2%.

Here are the calculations:

### Pensacola
- This Year's Labor Cost: \[tex]$285,000 - This Year's Revenue: \$[/tex]980,500

Projected Labor Cost:
[tex]\[ \text{Projected Labor Cost} = \$285,000 \times 1.02 = \$290,700 \][/tex]

Projected Revenue:
[tex]\[ \text{Projected Revenue} = \$980,500 \times 1.02 = \$1,000,110 \][/tex]

Projected Labor Cost Percentage:
[tex]\[ \text{Labor Cost Percentage} = \left( \frac{\$290,700}{\$1,000,110} \right) \times 100 \approx 29.07\% \][/tex]

### Daytona
- This Year's Labor Cost: \[tex]$197,250 - This Year's Revenue: \$[/tex]720,000

Projected Labor Cost:
[tex]\[ \text{Projected Labor Cost} = \$197,250 \times 1.02 = \$201,195 \][/tex]

Projected Revenue:
[tex]\[ \text{Projected Revenue} = \$720,000 \times 1.02 = \$734,400 \][/tex]

Projected Labor Cost Percentage:
[tex]\[ \text{Labor Cost Percentage} = \left( \frac{\$201,195}{\$734,400} \right) \times 100 \approx 27.40\% \][/tex]

### Fort Myers
- This Year's Labor Cost: \[tex]$235,500 - This Year's Revenue: \$[/tex]850,250

Projected Labor Cost:
[tex]\[ \text{Projected Labor Cost} = \$235,500 \times 1.02 = \$240,210 \][/tex]

Projected Revenue:
[tex]\[ \text{Projected Revenue} = \$850,250 \times 1.02 = \$867,255 \][/tex]

Projected Labor Cost Percentage:
[tex]\[ \text{Labor Cost Percentage} = \left( \frac{\$240,210}{\$867,255} \right) \times 100 \approx 27.70\% \][/tex]

### Tampa
- This Year's Labor Cost: \[tex]$279,750 - This Year's Revenue: \$[/tex]921,750

Projected Labor Cost:
[tex]\[ \text{Projected Labor Cost} = \$279,750 \times 1.02 = \$285,345 \][/tex]

Projected Revenue:
[tex]\[ \text{Projected Revenue} = \$921,750 \times 1.02 = \$940,185 \][/tex]

Projected Labor Cost Percentage:
[tex]\[ \text{Labor Cost Percentage} = \left( \frac{\$285,345}{\$940,185} \right) \times 100 \approx 30.35\% \][/tex]

### Miami
- This Year's Labor Cost: \[tex]$1,190,250 - This Year's Revenue: \$[/tex]3,720,000

Projected Labor Cost:
[tex]\[ \text{Projected Labor Cost} = \$1,190,250 \times 1.02 = \$1,214,055 \][/tex]

Projected Revenue:
[tex]\[ \text{Projected Revenue} = \$3,720,000 \times 1.02 = \$3,794,400 \][/tex]

Projected Labor Cost Percentage:
[tex]\[ \text{Labor Cost Percentage} = \left( \frac{\$1,214,055}{\$3,794,400} \right) \times 100 \approx 32.00\% \][/tex]

### Summary Table
To summarize the calculations in a tabular format:

[tex]\[ \begin{array}{|l|c|c|c|c|c|} \hline \text{Base} & \text{This Year's Labor Cost} & \text{This Year's Revenue} & \text{Projected Labor Cost} & \text{Projected Revenue} & \text{Projected Labor Cost \%} \\ \hline \text{Pensacola} & \$285,000 & \$980,500 & \$290,700 & \$1,000,110 & 29.07\% \\ \hline \text{Daytona} & \$197,250 & \$720,000 & \$201,195 & \$734,400 & 27.40\% \\ \hline \text{Fort Myers} & \$235,500 & \$850,250 & \$240,210 & \$867,255 & 27.70\% \\ \hline \text{Tampa} & \$279,750 & \$921,750 & \$285,345 & \$940,185 & 30.35\% \\ \hline \text{Miami} & \$1,190,250 & \$3,720,000 & \$1,214,055 & \$3,794,400 & 32.00\% \\ \hline \end{array} \][/tex]

Thus, Jaymal should budget the projected revenue and labor costs as shown above for each unit. The table also includes the projected labor cost percentages if he meets his budget.

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