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:

Budgeted unit sales		700
Selling price per unit	$	2,070
Cost per unit	$	1,605
Variable selling and administrative expense (per unit)	$	60
Fixed selling and administrative expense (per year)	$	200,000
Interest expense for the year	$	23,000

Required:

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

Answer 1

Gig Harbor Boating

Budgeted Income Statement for the year

                                                     

Sales (700 x 2070) $14,49,000

Cost of goods sold (700x1605) $ 11,23,500

Gross margin $ 3,25,500

Selling and administrative expenses $ 2,42,000

[(700x60)+200000]                          

Net operating income $ 83,500

Interest expense $ 23,000

Net income $ 60,500

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