Reference no: EM132659550

Question 1: Outdoor Outfitters has created a flexible budget for the 70,000-unit and the 80,000-unit levels of activity shown as follows. Complete Outdoor Outfitters's flexible budget at the 98,000-unit level of activity. Assume that the cost of goods sold and variable operating expenses vary directly with sales and that income taxes remain at 30 percent of operating income.
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                                                  70,000 Units            80,000 Units           98,000 Units

Sales                                         $ 1,400,000                  $1,600,000 _________________

Cost of goods sold                          840,000                       960,000 ___________________
Gross profit on sales                       $560,000                     $640,000 _____________
Operating Expense (90,000 fixed)           370,000                    410,000 ____________________
Operating Income                           $190,000                       $230,000 ______________________
Income Tax (30% of operating income) 57,000                          69,000 __________________________
Net income                                     133,000                         161,000 _______________________