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