Question

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 $10.80 Variable selling and administrative expenses per unit $1.10 Fixed selling and administrative expenses $423,000 Tax rate 35% 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:

                                     Oliver Company

            Budgeted Income Statement  For the Coming Year

Sales ($10.80 * 160,000)                                               $1,728,000

Cost of goods sold  ($6.30 * 160,000)                       ($1,008,000)

Gross margin(Sales - COGS)                                        $720,000

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

($1.10 * 160,000)

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

Operating income                                                          $121,000

Less: Income taxes (35% * 121,000)                               ($42,350)

Net income                                                                      $78,650