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A company has the following budget information: Sales: $118,800; COGS: $48,500; Depreciation expense: $1,500; Interest expense: $250; Other expenses: $41,880. If the company budgets 40% for income tax expense, the amount of budgeted income tax expense will be

Respuesta :

Answer: Amount of budgeted income tax expense = $10,668

Explanation:

Given:

Sales = $118,800

COGS = $48,500

Depreciation expense = $1,500

Interest expense = $250

Other expenses = $41,880

We'll compute the amount of budgeted income tax expense using the following formula:

Amount of budgeted income tax expense = 40% of (Sales - COGS - Depreciation expense - Interest expense - Other expenses)

= $118,800 - $48,500 - $1,500 - $250 - $41,880

= 40% x $26,670  

= $10,668

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The amount of budgeted income tax expense will be = $10,668

What is income tax?

A tax placed on people or organizations in relation to their income or profits is known as an income tax. Tax rates multiplied by taxable income are typically used to calculate income taxes.

Given:

Sales = $118,800

COGS = $48,500

The cost of depreciation is $1,500.

Interest costs equal $250.

Other costs come to $41,880.

  • The following formula will be used to determine the amount of planned income tax expense:

Budgeted income tax expense is equal to 40% of (Sales - COGS - Depreciation expense - Interest expense - Other expenses)

= $118,800 - $48,500 - $1,500 - $250 - $41,880

= 40% times $26,670

= $10,668

Thus, the Budgeted income tax will be  $10,668

Learn more about Budgeted income tax :

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