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 820 Selling price per unit $ 2,130 Cost per unit $ 1,500 Variable selling and administrative expense (per unit) $ 75 Fixed selling and administrative expense (per year) $ 400,000 Interest expense for the year $ 29,000 Required: Prepare the company’s budgeted income statement for the year.

Answer 1

Budgeted Income Statement for the year

Sales (820 units × $ 2,130) $1,746,600

Less Cost of Sales (820 units × $ 1,500) ($1,230,000)

Gross Profit $516,000

Less Operating Expenses :

Selling and administrative expense

Variable (820 units × $ 75) ($61,500)

Fixed ($400,000)

Operating Profit $54,500

Less Non - Operating Expenses :

Interest ( $29,000)

Net Income / (Loss) $25,500

Step-by-step explanation:

Income Statement shows the company`s performance from its operations.

Income / (Loss) = Sales - Expenses.