Budgeted Income Statement for Fortune, Inc. for the First Quarter
What is the budgeted income statement for Fortune, Inc. for the first quarter?
Budgeted Income Statement:
Sales revenue: $3,750,000
Cost of goods sold: $1,800,000
Gross profit: $1,950,000
Expenses:
- Commission: $375,000
- Advertising: $412,500
- Office salaries: $222,000
- Depreciation: $165,000
- Interest expense: $10,075
Total expenses: $1,184,575
Net income: $765,425
Explanation:
Data and Calculations:
The selling price per unit is $25, and the forecasted sales units are 40,000 for January, 60,000 for February, and 50,000 for March, totaling 150,000 units for the quarter. This results in sales revenue of $3,750,000 ($25 * 150,000).
The cost of goods sold is $12 per unit, equating to $1,800,000 for the quarter (150,000 * $12).
Commissions are 10% of sales dollars, amounting to $375,000 ($3,750,000 * 10%). Rent is $17,000 per month, totaling $51,000 for the quarter.
Advertising costs are 11% of sales dollars, leading to $412,500 ($3,750,000 * 11%). Office salaries are $74,000 per month, resulting in $222,000 for the quarter.
Depreciation is $55,000 per month, totaling $165,000 for the quarter. Interest expense is 13% annually on a $210,000 note payable, resulting in $10,075 for the quarter ($210,000 * 13% * 1/4).