Question

Thomas Company has completed all of its operating budgets. The sales budget for the year shows 50,000 units and total sales of $2,000,000. The total unit cost is $22. Selling and administrative expenses are expected to be $300,000. Income taxes are estimated to be 25% of income from operations. What is the company’s budgeted net income?

Answer 1

Net operating income= 450,000

Step-by-step explanation:

Giving the following information:

The sales budget for the year shows 50,000 units and total sales of $2,000,000. The total unit cost is $22. Selling and administrative expenses are expected to be $300,000.

Tax rate= 25%

We need to do an income statement:

Sales= 2,000,000

Cost of goods sold= (50,000*22)= (1,100,000)

Gross profit= 900,000

Selling and administrative expenses= (300,000)

Income before tax= 600,000

Tax= (0,25*600,000)= (150,000)

Net operating income= 450,000