Sherry and John Enterprises are using the kaizen approach to budgeting for 2018. The budgeted income statement for January 2018 is as follows: Sales (168,000 units) $1,060,000 Less: Cost of goods sold 620,000 Gross margin 440,000 Operating expenses 390,000 (includes $60,000 of fixed costs) Operating income $50,000 Under the kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 3% per month. What is budgeted gross margin for March 2018?
$413,996
$466,796
$426,800
$476,642
Gross margin formula,
Sale - cost of goods sold(COGS)= gross margin
Given,
#COGS for January. = 620000
#COGS & variable operating expenses are decline by 3% per month.
Therefore;
COGS for March:
COGS for January. = 620000
(-) 3% decline. = 18600 (620000×3%)
COGS for February. = 601400
(-) 3% decline. = 18042(601400×3%)
COGS for March = 583358
Gross margin for March:
Sale. = 1060000
(-)COGS for March. = (583358)
:: gross margin. = 476642
Summary:
Therefore answer is $476642
Sherry and John Enterprises are using the kaizen approach to budgeting for 2018. The budgeted income...
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Sherry and John Enterprises are using the kaizen approach to budgeting for 2018. The budgeted income statement for January 2018 is as follows: Sales (168,000 units) $1,010,000 Less: Cost of goods sold 690,000 Gross margin 320,000 Operating expenses 400,000 (includes $55,000 of fixed costs) Operating income -$80,000 Under the kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month. What is the budgeted operating income for...
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