Question

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		780
Selling price per unit	$	2,110
Cost per unit	$	1,615
Variable selling and administrative expense (per unit)	$	55
Fixed selling and administrative expense (per year)	$	300,000
Interest expense for the year	$	27,000

Required:

Prepare the company’s budgeted income statement for the year.

Answer 1

Gig Harbor Boating
Budgeted Income Statement
	Total	Per UNIT
Sales Revenue	1,645,800	2,110
Variable Expenses
Purchase Cost	1,259,700	1,615
Selling and Admin Expense	42,900	55
Total Variable Expense	1,302,600	1,670
Contribution margin	343,200	440
Fixed Expense:
Selling and Admin Expense	300,000
Interest Expense	27,000
Net Operating Income	16,200