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To recover R&D expenditure, manufacturers of 'smart (intelligent; networked) devices are aiming for a gross profit margin of 45 percent. The last two Operating Statements for Nikon Ltd.'s production of new 'smart devices (with some automation) is shown: Operating Statements Period 1 Sales () Less costs: Materials/machining Direct labour Packaging Office costs Administration *Asset depreciation Office utility bills Sales staff costs Total facility costs Profit /income *production machinery 97,800 81,500 6,510 24,000 16,000 3,000 1,040 4,060 233,910 Period 2 326,00 Sales 371,000 () Less costs: Materials/machining 111,300 Direct labour 92,750 Packaging 7,409 Office costs 24,000 Administration 16,000 *Asset depreciation 3,000 Office utility bills 1,040 Sales staff costs 4,060 Total facility costs 259,559 92,090 Profit /income 111,441 a) Operating Budget: The production facility expects sales of 490,000 in the coming quarterly (3- month) period. Prepare an operating budget for Period 3 - this is to be based on the costing data given above. b) Financial Reporting: Prepare an Income Statement for Periods 1, 2 and 3 in the typical format used for financial accounting (clearly identifying the Gross Profit; Operating Profit and Net Income) given Taxation of 20%. Critically examine their Profit Margins and evaluate the cost effectiveness/ competitiveness of these high technology products. To recover R&D expenditure, manufacturers of 'smart (intelligent; networked) devices are aiming for a gross profit margin of 45 percent. The last two Operating Statements for Nikon Ltd.'s production of new 'smart devices (with some automation) is shown: Operating Statements Period 1 Sales () Less costs: Materials/machining Direct labour Packaging Office costs Administration *Asset depreciation Office utility bills Sales staff costs Total facility costs Profit /income *production machinery 97,800 81,500 6,510 24,000 16,000 3,000 1,040 4,060 233,910 Period 2 326,00 Sales 371,000 () Less costs: Materials/machining 111,300 Direct labour 92,750 Packaging 7,409 Office costs 24,000 Administration 16,000 *Asset depreciation 3,000 Office utility bills 1,040 Sales staff costs 4,060 Total facility costs 259,559 92,090 Profit /income 111,441 a) Operating Budget: The production facility expects sales of 490,000 in the coming quarterly (3- month) period. Prepare an operating budget for Period 3 - this is to be based on the costing data given above. b) Financial Reporting: Prepare an Income Statement for Periods 1, 2 and 3 in the typical format used for financial accounting (clearly identifying the Gross Profit; Operating Profit and Net Income) given Taxation of 20%. Critically examine their Profit Margins and evaluate the cost effectiveness/ competitiveness of these high technology products

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