Exercise 7-8 Budgeted Income Statement [LO7-9] Gig Harbor Boating is the wholesa

Question

Exercise 7-8 Budgeted Income Statement [LO7-9]

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:

Prepare the company’s budgeted income statement using an absorption income statement format.

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:

Explanation / Answer

Gig Harbor Boating

Budgeted Income Statement

Sales(500 units × $1,970 per unit) $985,000 Cost of goods sold(500 units × $1,460 per unit) $730,000 Gross margin $255,000 Selling and administrative expenses[(500 units × $50 per unit) + $196,000] $221,000 Net operating income $34,000 Interest expense $13,000 Net income $21,000

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