Question

Preparing a Budgeted Income Statement Oliver Company provided the following information for the coming year: Units produced and sold 160,000 Cost of goods sold per unit $6.30 Selling price $11 Variable selling and administrative expenses per unit $1.10 Fixed selling and administrative expenses $423,000 Tax rate 33 % Required: Prepare a budgeted income statement for Oliver Company for the coming year. Round all income statement amounts to the nearest dollar.

Answer 1

Answer and Explanation:

The preparation of the income statement is presented below:

Sales $1,760,000 (160,000 × $11)

Less: cost of goods sold ($1,008,000) (160,000 × $6.30)

Gross margin $752,000

Less: Variable selling and administrative expenses ($176,000) (160,000 × $1.10)

Less: Fixed selling and administrative expenses ($423,000)

Operating income $153,000

Less: INcome taxes ($50,490)

Net income $102,510