Gig Harbor Boating is the wholesale distributor of a small recreational catamara

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 Selling price per unit Cost per unit Variable selling and administrative expense (per unit) Fixed selling and administrative expense (per year) Interest expense for the year 580 $ 2,010 $ 1,470 $ 45 $ 200,000 $ 17,000 Required: Prepare the company's budgeted income statement for the year. Gig Harbor Boating Budgeted Income Statement

Explanation / Answer

Budgeted income statement :

Sales (580*2010) 1165800 Less: Cost of goods sold (580*1470) 852600 Gross profit 313200 Less: Selling and administrative expense (580*45+200000) 226100 Operating income 87100 Less: Interest expense 17000 Net income 70100

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