Problem 3 Mobility Scooters Inc., is a wholesale distributor of battery-powered
ID: 2552753 • Letter: P
Question
Problem 3
Mobility Scooters Inc., is a wholesale distributor of battery-powered scooters for homebound seniors. Management has prepared the following summary data to use in its annual budgeting process:
Budgeted unit sales
380
Selling price per unit
$1,850
Cost per unit
$1,425
Variable selling and administrative expenses (per unit)
$85
Fixed selling and administrative expenses (per year)
$105,000
Interest expense for the year
$11,000
Required:
Prepare the company’s budged income statement using an absorption income statement format as shown in schedule 9 (complete the following table):
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses
Net operating income
Interest expense
Net income
Budgeted unit sales
380
Selling price per unit
$1,850
Cost per unit
$1,425
Variable selling and administrative expenses (per unit)
$85
Fixed selling and administrative expenses (per year)
$105,000
Interest expense for the year
$11,000
Explanation / Answer
Sales 703000 =380*1850 Cost of goods sold 541500 =380*1425 Gross margin 161500 Selling and administrative expenses 137300 =105000+(380*85) Net operating income 24200 Interest expense 11000 Net income 13200
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