Baskin Promotions, Inc. sells T-shirts decorated for a variety of concert performers. The company has developed the following budget for the coming year based on a sales forecast of 80,000 T-shirts: Sales Cost of Goods Sold. Gross Profit. Operating Expenses ($100,000 is fixed). Operating Income Income Taxes (30% of operating income) Net Income $1,400,000 820,000 580,000 418,400 161,600 48,480 S 113.120 Cost of goods sold and variable operating expenses vary directly with sales, and the income tax rate is 30% at all levels of operating income. If the concert season is slow due to poor weather, Baskin estimates that sales could fall to as low as 60,000 T-shirts. Assume Baskin actually achieves the 60,000 unit sales level, and that net income actually earned at this level was $70,000. A performance report would indicate that net income was: A. $2,660 over budget. O B. $43,120 under budget . O C. $90,000 under budget. budgotod louel

Baskin Promotions, Inc. sells T-shirts decorated for a variety of concert performers. The company has developed the following budget for the coming year based on a sales forecast of 80,000 T-shirts: Sales Cost of Goods Sold. Gross Profit. Operating Expenses ($100,000 is fixed). Operating Income Income Taxes (30% of operating income) Net Income $1,400,000 820,000 580,000 418,400 161,600 48,480 S 113.120 Cost of goods sold and variable operating expenses vary directly with sales, and the income tax rate is 30% at all levels of operating income. If the concert season is slow due to poor weather, Baskin estimates that sales could fall to as low as 60,000 T-shirts. Assume Baskin actually achieves the 60,000 unit sales level, and that net income actually earned at this level was $70,000. A performance report would indicate that net income was: A. $2,660 over budget. O B. $43,120 under budget . O C. $90,000 under budget. budgotod louel

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 expense (per unit) Fixed selling and administrative expense (per year) Interest expense for the year Required: Prepare the company's budgeted income statement for the year. Gig Harbor Boating Budgeted Income Statement 600 $ 2,020 $ 1,670 $ 55 $ 107,000 $ 18,000
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