Reference no: EM131773672

Question - Nation Wide Corporation is developing its budgets for 2018 and, for the first time, will use the kaizen approach. The initial 2018 income statement, based on static data from 2017 is as follow:

Sales (200,000 units) $2,000,000

Less: Cost of goods sold   1,200,000

Gross profit    800,000

Operating expenses (includes $200,000 of depreciation)    600,000

Operating income         $200,000

Selling prices for 2018 are expected to increase by 8%, and sales volume in units will decrease by 10%. The cost of goods sold as estimated by the kaizen approach will decline by 10% per unit. Other than depreciation, all other operating costs are expected to decline by 5%.

Required: Prepare kaizen-based budgeted income statement for 2018.