Oregon Weights manufactures a specialty precision scale. For January, the company expects to sell 1 comma 500 scales at an average price of $ 2 comma 320 per unit. The average manufacturing cost of each unit sold is $ 1 comma 420. Variable operating expenses for the company will be $ 1.40 per unit sold and fixed operating expenses are expected to be $ 7 comma 600 for the month. Monthly interest expense is $ 3 comma 300. The company has a tax rate of 40 % of income before taxes. Prepare Oregon Weights 's budgeted income statement for January.

Question

Business

Demarcus Key

10 March, 19:25

Oregon Weights manufactures a specialty precision scale. For January, the company expects to sell 1 comma 500 scales at an average price of $ 2 comma 320 per unit. The average manufacturing cost of each unit sold is $ 1 comma 420. Variable operating expenses for the company will be $ 1.40 per unit sold and fixed operating expenses are expected to be $ 7 comma 600 for the month. Monthly interest expense is $ 3 comma 300. The company has a tax rate of 40 % of income before taxes. Prepare Oregon Weights 's budgeted income statement for January.

+5

Answers (1)

Know the Answer?

Sandy · Answer 1

The preparation of income statement for January is shown below:-

Particulars Computation Amount

Sales 1,500 * $2,320 $3,480,000

Less: Cost of Goods sold 1,500 * $1,420 $2,130,000

Gross Profit $1,350,000

Less: Operating expenses

Variable portion 1,500 * $1.40 $2,100

Fixed operating expenses $7,600

Operating income $1,340,300

Less: Interest expense $3,300

Income tax expense ($1,340,300 - $3,300) * 40% $534,800

Net income $802,200