Question

EXERCISE 8-8 Budgeted Income Statement L08-9 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: 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 460 $1,950 $1,575 $75 $105,000 $14,000 Required: Using Schedule as your guide, prepare the company's budgeted income statement for the year.

Answer 1

Gig Harbor Boating

Budgeted Income Statement

Sales (460 units × $1,950 per unit)	$897,000
Cost of goods sold (460 units × $1,575 per unit)	$724,500
Gross margin	$172,500
Selling and administrative expenses [(460 units × $75 per unit) + $105,000]	$139,500
Net operating income	$33,000
Interest expense	$14,000
Net income	$19,000