Required informationSkip to question [The following information applies to the questions displayed below.] 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 90,000 T-shirts: Sales$1,584,000 Cost of Goods Sold 931,500 Gross Profit 652,500 Operating Expenses ($100,000 is fixed) 458,200 Operating Income 194,300 Income Taxes (30% of operating income) 58,290 Net Income$136,010 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 70,000 T-shirts. In a flexible budget for sales of 70,000 T-shirts, how much would Baskin budget for operating expenses? Multiple Choice $278,600 $378,600 $458,200 $358,200

Answered: In a flexible budget for sales of…

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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[The following information applies to the questions displayed below.]

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 90,000 T-shirts:


Sales	$	1,584,000
Cost of Goods Sold		931,500
Gross Profit		652,500
Operating Expenses ($100,000 is fixed)		458,200
Operating Income		194,300
Income Taxes (30% of operating income)		58,290
Net Income	$	136,010

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 70,000 T-shirts.

In a flexible budget for sales of 70,000 T-shirts, how much would Baskin budget for operating expenses?

Multiple Choice

$278,600
$378,600
$458,200
$358,200

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