The partnership of GENO and PEARLS i
The
· Sales for the second quarter of the calendar year is seen to be at 10,000 units, 15,000 units, and 12,000 units. However, budgeted sales for May might go up to 20,000 units depending on further analysis of fixed costs and outside market forces. If fixed costs go down and favorable market forces are seen, the increase in sales will proceed in the budget preparation.
· The entity wants to maintain 4,000 units as ending inventory every month for the whole year. Each unit of inventory requires 3 lbs. of direct materials, 2 hours of direct labor, and P12 worth of
· All operating expenses is estimated to be at 40% of gross profit, giving respect to the potential changes in costs and expenses. Tax rate is 25%.
· It was determined that fixed costs, particularly administrative utilities, will go down due to a new technology the entity is trying to use. The number of unit sales in June, however, is not expected to increase. Favorable market forces are also expected.
· The selling price of each each unit is P250.
· Geno and Pearls would like to divide profits equally.
How much is the budgeted net income for the second quarter?
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