Question

Brainard Corporation's budgeted sales for the upcoming quarter are $400,000. Its supporting budgets and schedules show a beginning finished goods inventory of $15,000, budgeted cost of goods manufactured of $185,000, and a projected ending finished goods inventory of $25,000. Its selling and administrative budget projects expenses of $148,000, its budgeted interest expense is $7,000, and its tax rate averages 40%. 1. The company's budgeted gross profit for the upcoming quarter is $ . 2. The company's budgeted income before taxes for the upcoming quarter is $ . 3. The company's budgeted income taxes for the upcoming quarter are $ . 4. The company's budgeted net income for the upcoming quarter is $ .

Answer 1

Answer:

Brainard Corporation

1. The company's budgeted gross profit for the upcoming quarter is $225,000.

2. The company's budgeted income before taxes for the upcoming quarter is $70,000.

3. The company's budgeted income taxes for the upcoming quarter are $28,000.

4. The company's budgeted net income for the upcoming quarter is $42,000.

Explanation:

a) Data and Calculations:

Budgeted Income Statement for the quarter:

Budgeted sales                                       $400,000

Cost of goods sold:

Beginning inventory                $15,000

Cost of goods manufactured  185,000

Cost of goods available       $200,000

less Ending inventory               25,000    175,000

Gross profit                                            $225,000

Selling and administrative    $148,000

Interest expense                        7,000    155,000

Income before tax                                   $70,000

Income taxes (40%)                                   28,000

Net income                                              $42,000