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25 July, 09:07

anufactures a specialty precision scale. For January, the company expects to sell 1 comma 500 scales at an average price of $ 2 comma 300 per unit. The average manufacturing cost of each unit sold is $ 1 comma 420. Variable operating expenses for the company will be $ 1.10 per unit sold and fixed operating expenses are expected to be $ 7 comma 700 for the month. Monthly interest expense is $ 3 comma 200. The company has a tax rate of 30 % of income before taxes. Prepare Bell Smythe 's budgeted income statement for January.

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  1. 25 July, 12:09
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    Budgeted net income of $913,295.00

    Explanation:

    The budgeted income statement comprises of budgeted revenue less variable production cost and variable overhead, as well as fixed expenses.

    The interest expense and tax are deducted in order to arrive at net income

    Bell Budgeted Income Statement for January:

    Budgeted sales revenue ($2,300*1,500) $3,450,000.00

    Variable Budgeted manufacturing cost ($1420*1500) ($2,130,000.00)

    Gross profit $1,320,000.00

    Variable operating expenses ($1.10*1500) ($1,650.00)

    Fixed operating expenses ($7,700.00)

    Operating income $1,310,650.00

    Monthly interest expense ($3,200.00)

    Taxes at the rate of 30% (1,310,450.00-3200) * 30% ($392,175.00)

    Budgeted net income $913,295.00

    Interest expense is a deductible expense in computing, that accounted for deducting from operating income before applying the tax rate of 30%
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