Question

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 44,000 for January, 64,000 for February, and 54,000 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 9% of sales dollars $ 22,000 per month 13% of sales dollars $ 74,000 per month $ 51,000 per month 11% annually on a $290,000 note payable 40% 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

FORTUNE, INC. Budgeted Income Statement For Quarter Ended March 31 Sales Cost of goods sold Gross Profit Operating expenses: 4,050,000 (44,000+ 64,000 + 54,000) units $25) 1,944,000 (44,000 64,000 +54,000) units $12) 2,106,000 364,500 ($4,050,000 9% ) $ Commissions $ Rent 22,000 $ 526,500 ($4,050,000 13% ) Advertising Office salaries 74,000 $ 51,000 Depreciation Total Operating expenses Operating Income 1,038,000 1,068,000 31,900 ($ 290,000 11 % ) Interest Income Before Tax 1,036,100 414,440 ($1,036,100 40% ) Income Tax $ Net Income 621,660