Reference no: EM132639340
Question 1. Prepare the budgeted income statement for the year
Budgeted Income Statement
Sales (1890 * $745) 1,408,050
Cost of goods sold (1890 *$240) 453,600
Gross Margin 954,450
Selling and administrative expenses (1890 * 105) +335000 533,450
Net operating income 421,000
Interest expense 14,000
Net income 407,000
Question 2. If the price of aluminum causes the cost per unit to increase by 5%, calculate the Net Income:
Cost Price increase by 5% = $252
Sales (1890 * $745) = 1408050
Cost of goods sold (1890 *$252) = 476280
Gross Margin = 931770
Selling and administrative expenses = 533450
Net operating income = 398320
Interest expense = 14000
Net income = $384,320