Question

C. Prepare a budgeted income statement, assuming 600 units to be produced and sold, a per unit selling price of $85, an income tax rate of 28% and the following information.

1. 1. Cost of goods sold of $35 per unit

   2. Labor = $400/month

      • One part-time employee will be hired to take care of packaging and shipping. This employee will be paid $10 per hour. He or she is estimated to work 40 hours total per month.

   3. Advertising fees = $3,000

   4. Bank fees = $200

   5. Phone/internet = $150 per month

   6. Shipping = $3 per unit

   7. Utilities = $100 per month

   8. Office Supplies = $900

   9. Conference Exhibitor Fee = $3000

   10. Travel Expenses for Conference (e.g. airfare, meals, taxi) = $1200

2. Based on the budgeted income statement calculated above for 20XY, create a new budgeted income for 20XZ assuming that the production and sales is double the level of 20XY.

Answer 1

Solution

BUDGETED INCOME STATEMENT FOR THE YEAR 20XY
				Amount $
	INCOME
		Sales ( 600 * $85)		51,000.00
		Less: Cost of goods sold ( 600 * $35)		21,000.00
		Gross Profit		30,000.00
	OPERATING EXPENSES
		Labor ( $400 *12 months)	4,800.00
		Wage to part time employee	400.00
		( $10 * 40 hours)
		Advertising Fee	3,000.00
		Bank Fee	200.00
		Phone /Internet ( $150 * 12 months)	1,800.00
		Shipping ( $3* 600)	1,800.00
		Utilities ( $100 * 12)	1,200.00
		Office Supplies	900.00
		Conference Exhibitor Fee	3,000.00
		Travel Expenses for expenses	1,200.00	18,300.00
		Income from operations		11,700.00
		Less : Tax @ 28%		3,276.00
		Net Income		8,424.00

Budgeted Income for year 20XZ

BUDGETED INCOME STATEMENT FOR THE YEAR 20XZ
				Amount $
	INCOME
		Sales ( 1200 * $85)		1,02,000.00
		Less: Cost of goods sold ( 1200 * $35)		42,000.00
		Gross Profit		60,000.00
	OPERATING EXPENSES
		Labor ( $400 *12 months)	4,800.00
		Wage to part time employee	400.00
		( $10 * 40 hours)
		Advertising Fee	3,000.00
		Bank Fee	200.00
		Phone /Internet ( $150 * 12 months)	1,800.00
		Shipping ( $3* 1200)	3,600.00
		Utilities ( $100 * 12)	1,200.00
		Office Supplies	900.00
		Conference Exhibitor Fee	3,000.00
		Travel Expenses for expenses	1,200.00	20,100.00
		Income from operations		39,900.00
		Less : Tax @ 28%		11,172.00
		Net Income		28,728.00