Answer:
Budgeted Income Statement For Quarter Ended March 31
Sales $3,675,000
Cost of goods sold $1,764,000
Gross profit $1,911,000
Operating expenses
Commissions expense $404,250
Rent expense $60,000
Advertising expense $441,000
Office salaries expense $222,000
Depreciation expense $147,000
Interest expense $ 7,425
Total operating expenses $1,281,675
Income before taxes $629,325
Income tax expense $251,730
Net income $ 377,595
Explanation:
Commissions 11 % of sales dollars
Rent $ 20,000 per month
Advertising 12 % of sales dollars
Office salaries $ 74,000 per month
Depreciation $ 49,000 per month
Interest 11 % annually on a $270,000 note payable
Tax rate 40%
Sales = Number of units for first quarter × price per unit
= (39,000 + 59,000 + 49,000) × $25
= $3,675,000
Cost of goods = (39,000 + 59,000 + 49,000) × $12
= $1,764,000
Commissions expense = 11 % of sales = 11% × $3,675,000 = $404,250
Advertising expense = 12 % of sales = 12% × $3,675,000 = $441,000
Interest expense = 11 % annually on a $270,000
= 11% × 270,000 × 3/12
= $ 7,425
Income = Gross profit - total operating expenses
= $1,911,000 - $1,281,675
= $629,325
Income tax expenses = 40% × $629,325 = $251,730
