Question

3 Gig Harbor Boating is the wholesale distributor of a small recreational catamaran sailboat. Management has prepared the following summary data to use in its annual budgeting process: $ 2.110 Budgeted unit sales Selling price per unit Cost per unit Variable selling and administrative expense (per unit) Fixed selling and administrative expense (per year) Interest expense for the year $ 27,000 Required: Prepare the company's budgeted income statement for the year Gig Harbor Boating Budgeted Income Statement

Answer 1

SOLUTION

Budgeted income statement

Particulars	Amount ($)
Sales (780 * $2,110)	1,645,800
Less: Cost of goods sold (780 * $1,615)	(1,259,700)
Gross profit	386,100
Less: Operating expenses
Variable selling and administrative expenses (780 * $55)	(42,900)
Fixed selling and administrative expenses	(300,000)
Profit before interest and Tax	43,200
Less: Interest	(27,000)
Net profit before tax	16,200