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Fortune, Inc., is preparing its master budget for the first quarter. The company sells a single product at a price of $25 per
Prepare a budgeted income statement for this first quarter. (Round your final answers t FORTUNE, INC. Budgeted Income Stateme
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Answer #1
WORKING NOTES:
Total Sales = 45,000 units + 55,000 units + 50,000 units = 150,000 Units
SOLUTION:
BUDGETED INCOME STATEMENT FOR FIRST QUARTER
Sales (150,000 Units X $ 25) $         37,50,000
Less: Cost of Goods Sold (150,000 Units X$ 14) $         21,00,000
Gross Profit $         16,50,000
Operating Expenses:
Commission (8% of $ 3,750,000) $          3,00,000
Rent ($ 14,000 X $ 3 Months) $              42,000
Advertising (15% of $ 3,750,000) $          5,62,500
Office Salaries ($ 75,000 X 3 Months) $          2,25,000
Depreciation ($ 40,000 X 3 Months) $          1,20,000
Interest Expenses ($ 250,000 X 5% X 3/12) $                3,125
$         12,52,625
Income before taxation $           3,97,375
Less: Taxation @ 30% $     1,19,212.50
Net Income after Tax $           2,78,163
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