Exercise 20-34 Budgeted income statement LO P3 Fortune, Inc., is preparing its m

Question

Exercise 20-34 Budgeted income statement LO P3

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 43,000 for January, 63,000 for February, and 53,000 for March. Cost of goods sold is $12 per unit. Other expense information for the first quarter follows.

of sales per dollars

per month

of sales dollars

per month

per month

annually on a $290,000 note payable

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

Comissions 10%

of sales per dollars

Rent $23,000

per month

Advertising 12%

of sales dollars

Offices salaries $73,000

per month

Depreciation $53,000

per month

Interest 15%

annually on a $290,000 note payable

Tax rate 40%

Explanation / Answer

Answer:-

Budgeted Income Statement Fortune Inc. For the quarter ended March 31 Particulars Amount $ Sales (43000+63000+53000)*$25 per unit 3975000 Less:- Cost of goods sold (43000+63000+53000)*$12 per unit 1908000 Gross profit 2067000 Less:- Opreating expenses Commission expenses $3975000*10% 397500 Rent expense $23000 per month*3 months 69000 Advertising expense $3975000*12% 477000 Office salaries expense $73000 per month*3 months 219000 Depreciation expense $53000 per month*3 months 159000 Interest expense ($290000*15%)*3 months/12 months 10875 Income before taxes 734625 Less:-Income tax expense $734625*40% 293850 Net Income 440775

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