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 expenses (per unit) 580 $2,010 $1,470 $45 Fred selling and administrative expenses (per year) $200 000 Interest expense for the year $17,000 Required: Prepare the company's budgeted income statement using an absorption income statement format Gig Harbor Boating Budgeted Income St Ask 0

Explanation / Answer

PREPARE BUDGETED INCOME STATEMENT USING ABSORPTION COSTING INCOME STATEMENT :

Sales (580*2010) 1165800 Less: Cost of goods sold (580*1470) (852600) Gross profit 313200 Less: Selling and administrative expenses (580*45+200000) (226100) Income from operation 87100 Less: interest expenses (17000) Income before tax 70100

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