Question

Brandy Sonney manufactures a specialty precision scale. For​ January, the company expects to sell 1,000 scales at an average price of $2,360 per unit. The average manufacturing cost of each unit sold is $1,400. Variable operating expenses for the company will be $1.40 per unit sold and fixed operating expenses are expected to be $7,100 for the month. The monthly interest expense is $3,800. The company has a tax rate of 40% of income before taxes. Prepare Brandy Sonney​'s budgeted income statement for January.

Answer 1

The budgeted income statement for Brandy Sonney in January projects sales revenue of $2,360,000 and a net income of $568,620 after accounting for expenses and taxes.

Step-by-step explanation:

Brandy Sonney's budgeted income statement for January can be prepared as follows.

Brandy Sonney Budgeted Income Statement - January

• Total Sales Revenue: 1,000 units x $2,360 per unit = $2,360,000
• Cost of Goods Sold: 1,000 units x $1,400 per unit = $1,400,000
• Gross Profit: Total Sales Revenue - Cost of Goods Sold = $2,360,000 - $1,400,000 = $960,000
• Variable Operating Expenses: 1,000 units x $1.40 per unit = $1,400
• Fixed Operating Expenses: $7,100
• Total Operating Expenses: Variable Operating Expenses + Fixed Operating Expenses = $1,400 + $7,100 = $8,500
• Operating Income: Gross Profit - Total Operating Expenses = $960,000 - $8,500 = $951,500
• Interest Expense: $3,800
• Income Before Taxes: Operating Income - Interest Expense = $951,500 - $3,800 = $947,700
• Tax Expense: 40% x Income Before Taxes = 0.4 x $947,700 = $379,080
• Net Income: Income Before Taxes - Tax Expense = $947,700 - $379,080 = $568,620

Brandy Sonney's budgeted income statement for January shows that the company expects to generate $2,360,000 in sales revenue and have a net income of $568,620 after considering all expenses and taxes.