The owner of a bicycle repair shop forecasts revenues of $160,000 a year. Variable costs will be $50,000, and rental costs for the shop are $30,000 a year. Depreciation on the repair tools will be $10,000.   a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%.           b. Calculate the operating cash flow for the repair shop using the three methods given below:   Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shield.

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.