Question

Brainard Corporation's budgeted sales for the upcoming quarter are $400,000. Its supporting budgets and schedules show a beginning finished goods inventory of $15,000, budgeted cost of goods manufactured of $185,000, and a projected ending finished goods inventory of $25,000. Its selling and administrative budget projects expenses of $148,000, its budgeted interest expense is $7,000, and its tax rate averages 40%. 1. The company's budgeted gross profit for the upcoming quarter is $ . 2. The company's budgeted income before taxes for the upcoming quarter is $ . 3. The company's budgeted income taxes for the upcoming quarter are $ . 4. The company's budgeted net income for the upcoming quarter is $ .

Answer 1

Brainard Corporation

1. The company's budgeted gross profit for the upcoming quarter is $225,000.

2. The company's budgeted income before taxes for the upcoming quarter is $70,000.

3. The company's budgeted income taxes for the upcoming quarter are $28,000.

4. The company's budgeted net income for the upcoming quarter is $42,000.

Step-by-step explanation:

a) Data and Calculations:

Budgeted Income Statement for the quarter:

Budgeted sales $400,000

Cost of goods sold:

Beginning inventory $15,000

Cost of goods manufactured 185,000

Cost of goods available $200,000

less Ending inventory 25,000 175,000

Gross profit $225,000

Selling and administrative $148,000

Interest expense 7,000 155,000

Income before tax $70,000

Income taxes (40%) 28,000

Net income $42,000