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 860 Selling price per unit $ 2,150 Cost per unit $ 1,625 Variable selling and administrative expense (per unit) $ 95 Fixed selling and administrative expense (per year) $ 335,000 Interest expense for the year $ 31,000 Required: Prepare the company’s budgeted income statement for the year.

Answer 1

Sales = $ 2,150 * 860

Cost of goods Sold = 860 * $ 1,625

Variable expense = $ 1,625 * 860

Variable selling and administrative expense = $95 * 860

Hence the correct answer is :

Budgeted income statement
Sales revenue	18,49,000
Less: Cost of goods sold	13,97,500
Gross Profit	4,51,500
Variable Selling and Administrative Expenses	81,700
Fixed Selling and Administrative Expenses	3,35,000
Operating Income	34,800
Interest Expense	31,000
Net Income	3,800