Gig Harbor Boating is the wholesale distributor of a small recreational catamara

Question

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:

Required:

Prepare the company’s budgeted income statement for the year.

Budgeted unit sales 640 Selling price per unit $ 2,040 Cost per unit $ 1,370 Variable selling and administrative expense (per unit) $ 75 Fixed selling and administrative expense (per year) $ 300,000 Interest expense for the year $ 20,000 Gig Harbor Boating Budgeted Income Statement

Explanation / Answer

company’s budgeted income statement for the year:

Budgted number of units sold 640 Selling price per unit ($) $ 2,040 Total Sales revenue ($) - A $ 13,05,600 Cost of goods sold (640 units @ $1370 per unit) $   8,76,800 Gross Margin $   4,28,800 Less: Operating expenses Selling & Admin expenses Variable (640 units x $75 per unit) $     48,000 Fixed $ 3,00,000 Total Operating expenses $   3,48,000 Operatinf Income $       80,800 Less: Other expenses Interest $       20,000 Net Income $       60,800

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