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 680 selling price per unit $ 2,060 cost per unit $ 1,680 variable selling and administrative expense (per unit) $ 50 fixed selling and administrative expense (per year) $ 200,000 interest expense for the year $ 22,000 required: prepare the company’s budgeted income statement for the year.

Answer 1

The budgeted income statement for Gig Harbor Boating shows a profit of $36,800.

Step-by-step explanation:

To prepare the budgeted income statement for Gig Harbor Boating, we need to calculate the total revenue, total cost, and the fixed expenses.

1. Total revenue = budgeted unit sales * selling price per unit = 680 * $2,060 = $1,401,200.
2. Total variable costs = budgeted unit sales * cost per unit = 680 * $1,680 = $1,142,400.
3. Total fixed expenses = fixed selling and administrative expense + interest expense = $200,000 + $22,000 = $222,000.
4. Total cost = total variable costs + total fixed expenses = $1,142,400 + $222,000 = $1,364,400.
5. Profit = total revenue - total cost = $1,401,200 - $1,364,400 = $36,800.

Therefore, the budgeted income statement for Gig Harbor Boating shows a profit of $36,800.