Deleon Inc. is preparing its annual budgets for the year ending December 31, 201

Question

Deleon Inc. is preparing its annual budgets for the year ending December 31, 2017. Accounting assistants furnish the data shown below. An accounting assistant has prepared the detailed manufacturing overhead budget and the selling and administrative expense budget. The latter shows selling expenses of $662,000 for product JB 50 and $363.000 for product JB 60, and administrative expenses of 5544,000 for product JB 50 and $343,000 for product JB 60. Interest expense is $150,000 (not a seated to products). Income taxes are expected to be 30%. Prepare the budgeted multiple-step income statement for the year. (Note: income taxes are not allocated to the products).

Explanation / Answer

Working:

DELON INC. Budgeted Income Statement JB 50 JB 60 Total Sales: Volume 402500 201200 Unit sellling price 22 27 Sales amount a 8855000 5432400 14287400 Cost of goods sold b 1195200 1884600 3079800 Gross profit c=a-b 7659800 3547800 11207600 Less: Expense: Selling expenses 662000 363000 1025000 Administration expenses 544000 343000 887000 Interest expenses 150000 Total expenses d 1206000 706000 1912000 Income before tax c-d 6453800 2841800 9295600 Less: Tax @30% 2788680 Net Income 6506920

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