Outdoor Outfitters has created a flexible budget for the 70,000-unit and the 80,

Question

Outdoor Outfitters has created a flexible budget for the 70,000-unit and the 80,000-unit levels of activity as shown below. Complete Outdoor Outfitters's flexible budget at the 93,500-unit level of activity. Assume that the cost of goods sold and variable operating expenses vary directly with sales and that income taxes remain at 30 percent of operating income. (Omit the "$" sign in your response.)

70,000 Units 80,000 Units 93,500units
Sales $ 1,400,000 $1,600,000 $
Cost of goods sold 840,000 960,000

Gross profit on sales $ 560,000 $ 640,000 $
Operating expenses ($90,000 fixed) 370,000 410,000

Operating income $190,000 $ 230,000 $
Income taxes (30% of operating income) 57,000 69,000

Net income $133,000 $ 161,000 $

Explanation / Answer

sales

2094000

(20*104,700)

cost of goods sold

1256400

(12*104,700)

gross profit on sales

837600

operating expenses

508800

(4*104,700 + 90,000)

income taxes

98640

(.3*(837600 - 508800)

net income

230160

sales

2094000

(20*104,700)

cost of goods sold

1256400

(12*104,700)

gross profit on sales

837600

operating expenses

508800

(4*104,700 + 90,000)

income taxes

98640

(.3*(837600 - 508800)

net income

230160

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