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Cost of goods sold and variable operating expenses

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Outdoor Outfitters has created a flexible budget for the 70,000-unit and the 80,000-unit levels of activity as shown below. Complete Outdoor Outfitters's flexible budget at the 87,300-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.


 70,000 Units
80,000 Units
87,300-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 expenses ($90,000 fixed)
370,000

410,000




Operating income $ 190,000
$ 230,000
$
Income taxes (30% of operating income)
57,000

69,000




Net income $ 133,000
$ 161,000
$



Reference no: EM13546543

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