Question

Exercise 20-34 Budgeted income statement LO P3 Fortune, Inc., is preparing its master budget for the first quarter. The company sells a single product at a price of $25 per unit. Sales (in units) are forecasted at 40,000 for January, 60,000 for February, and 50,000 for March. Cost of goods sold is $12 per unit. Other expense information for the first quarter follows. Commissions Rent Advertising Office salaries Depreciation Interest Tax rate 8% of sales dollars $ 21,000 per month 14% of sales dollars $80,000 per month $53,000 per month 10% annually on a $300,000 note payable 30% Prepare a budgeted income statement for this first quarter. (Round your final answers to the nearest whole dollar.) FORTUNE, INC. Budgeted Income Statement For Quarter Ended March 31 Operating expenses

Answer 1

Answer-

FORTUNE INC.
BUDGETED INCOME STATEMENT
FOR THE QUARTER ENDED MARCH 31
PARTICULARS		AMOUNT
		$
Sales	(40000 units+60000 units+50000 units)*$25 per unit	3750000
Less- Cost of goods sold	(40000 units+60000 units+50000 units)*$12 per unit	1800000
Gross profit (a)		1950000
Less- Operating expenses
Commissions	$3750000*8%	300000
Rent	$21000 per month*3 months	63000
Advertising	$3750000*14%	525000
Office salaries	$80000 per month*3 months	240000
Depreciation	$53000 per month*3 months	159000
Interest	($300000*10%)*3 months/12 months	7500
Total operating expenses (b)		1294500
Income before income taxes (c=a-b)		655500
Less- Income taxes	$655500*30%	196650
Net Income		458850