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 98,500-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.)

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 98,500-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.)

Explanation / Answer

Operating expense = 90000 + 98500 * 4 = 484000

Operating income = 788000 - 484000 = 304000

Income tax = 0.3 * 304000 = 91200

Net Income = 304000 - 91200 = 212,800

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