Smith and Sons_Budgeted income statement

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Description

Smith and Sons is developing
the 2011 budget. In 2011 the company would like to increase selling prices by
20%, and as a result expects a decrease in sales volume of 10%. Cost of goods
sold as a percentage of sales is expected to increase to 65%. Other than
depreciation, all operating costs are variable as a percentage of total sales.
Prepare a budgeted income statement for 2011

Additional
Requirements

Sales
(100,000 units) $400,000/$100,000 = $ 4 per unit $400,000
Less:
cost of goods sold ($250,000/$400,000= 62.5%) 250,000
Gross
profit (150,000/250,000 = .37.5) 150,000
Operating
expenses (includes $10,000 of depreciation)
((110,000
-10,000)/100,000 units = $1.00 per unit) 110,000
Net
income (40,000/400,000 = 10%) $ 40,000

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