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finial exam - Assignment Example
Author : olinkessler
Finance & Accounting
Pages 4 (1004 words)
Analysis of Blueberry Acres Ten Year Budget Name Institution Date Analysis of ten year budget The budget for the 10 year projections are reasonable in some areas and unreasonable in others. The assumptions leading to the figures relating to the following areas have been found to be reasonable…
ii. The wages are in accordance with the Federal minimum wage which is $7.25 per hour – the lowest pay rate offered by the company. Although, the last minimum wage increase in California was in 2008 when it increased to $8 the Federal minimum wage remained at $7.25 per hour (Bernstein 2013). Both rates are expected to increase in the near future if the Governor and the President have their way to $10 per hour n 2016 (Bernstein 2013). iii. The level of inflation which is set at 3% for expenses is considered fair as it is close to the projected inflation rate. iv. The company took liability insurance into account even though it is not a requirement in California at this time. This is an indication of the importance it places on this issue. The areas which appear unreasonable relates to vehicle expenses, amounts omitted and the amortization period for the loan. These are outlined as follows: i. Motor vehicle expenses are assumed to remain constant from one year to the next. This is highly unlikely to happen since the Consumer Price Index (CPI) for 2013 indicated that license fees and the cost of maintaining a vehicle both increased (BLS 2013). ii. ...