Question

Fortune, Inc., is preparing its master budget for the first quarter. The company sells a single product at a price of $25 per unit. Sales (in units) are forecasted at 41,000 for January, 61,000 for February, and 51,000 for March. Cost of goods sold is $12 per unit. Other expense information for the first quarter follows.

Commissions		9	%	of sales dollars
Rent	$	18,000		per month
Advertising		13	%	of sales dollars
Office salaries	$	72,000		per month
Depreciation	$	53,000		per month
Interest		13	%	annually on a $240,000 note payable
Tax rate		30	%

  
Prepare a budgeted income statement for this first quarter. (Round your final answers to the nearest whole dollar.)

	FORTUNE, INC. Budgeted Income Statement For Quarter Ended March 31 Operating expenses 0 $0

Answer 1

Total budgeted unit sales for the quarter
Jan	41,000
Feb	61,000
Mar	51,000
Total	153,000
FORTUNE, INC.
Budgeted Income Statement
For Quarter Ended March 31
Sales Revenue (153,000*$25)		$3,825,000
Less: Cost of goods sold (153,000*12)		$1,836,000
Gross profit		$1,989,000
Other Expenses:
Commissions (9%*3,825,000)	$344,250
Rent (18,000*3months)	$54,000
Advertising (13%*3,825,000)	$497,250
Office salaries (72,000*3)	$216,000
Depreciation (53,000*3)	$159,000
Interest (240,000*13%*3/12)	$7,800
		$1,278,300
Net profit (Gross profit-Other exp)		$710,700
Less: Tax " 30%		$213,210
Net profit after tax		$497,490