What the net income that performance report would indicate

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Question - Baskin Promotions, Incorporated sells T-shirts decorated for a variety of concert performers. The company has developed the following budget for the coming year based on a sales forecast of 80,000 T-shirts:

Sales $1,400,000

Cost of Goods Sold 820,000

Gross Profit 580,000

Operating Expenses ($100,000 is fixed) 418,400

Operating Income 161,600

Income Taxes (30% of operating income) 48,480

Net Income $113,120

Cost of goods sold and variable operating expenses vary directly with sales, and the income tax rate is 30% at all levels of operating income.

If the concert season is slow due to poor weather, Baskin estimates that sales could fall to as low as 60,000 T-shirts.

Assume Baskin actually achieves the 60,000 unit sales level, and that net income actually earned at this level was $70,000. What the net income was that performance report would indicate.

a. $43,120 under budget.

b. $90,000 under budget.

c. $2,660 over budget.

d. At the budgeted level

Reference no: EM133033089

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