Budgeted income statement Last year's income statement for Cooper Company is as follows: Sales Cost of goods sold Direct material Direct labor Overhead Gross profit Expenses Selling Administrative Income before taxes Sales Cost of goods sold Direct material Direct labor Overhead Gross profit Expenses Selling $880,000 440,000 220,000 1,540,000 $660,000 $228,800 264,000 This year, unit sales of 220,000 are expected to increase by 25 percent; material and labor costs are expected to increase by 10 percent per unit. Overhead is applied to production based on a percentage of direct labor costs. Fixed selling expenses total $52,800; the remainder varies with sales dollars. All administrative costs are fixed. Management desires to earn 10 percent on sales this year and will adjust the unit selling price if necessary. Develop a budgeted income statement for the year for Cooper Company that incorporates the indicated. changes. Note: Do not use negative signs with your answers. Note: After calculating your selling price per unit, round your answer to two decimal places and use this rounded amount to calculate sales in total. $ $ $ $2,200,000 $ Administrative Income before taxes $ 492,800 $167,200 0 0 0 0 0 0 0 0
Budgeted income statement Last year's income statement for Cooper Company is as follows: Sales Cost of goods sold Direct material Direct labor Overhead Gross profit Expenses Selling Administrative Income before taxes Sales Cost of goods sold Direct material Direct labor Overhead Gross profit Expenses Selling $880,000 440,000 220,000 1,540,000 $660,000 $228,800 264,000 This year, unit sales of 220,000 are expected to increase by 25 percent; material and labor costs are expected to increase by 10 percent per unit. Overhead is applied to production based on a percentage of direct labor costs. Fixed selling expenses total $52,800; the remainder varies with sales dollars. All administrative costs are fixed. Management desires to earn 10 percent on sales this year and will adjust the unit selling price if necessary. Develop a budgeted income statement for the year for Cooper Company that incorporates the indicated. changes. Note: Do not use negative signs with your answers. Note: After calculating your selling price per unit, round your answer to two decimal places and use this rounded amount to calculate sales in total. $ $ $ $2,200,000 $ Administrative Income before taxes $ 492,800 $167,200 0 0 0 0 0 0 0 0
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text:Budgeted income statement
Last year's income statement for Cooper Company is as follows:
Sales
Cost of goods sold
Direct material
Direct labor
Overhead
Gross profit
Expenses
Selling
Administrative
Income before taxes
Sales
Cost of goods sold
Direct material
Direct labor
$880,000
440,000
220,000 1,540,000
$660,000
$228,800
264,000
Overhead
Gross profit
Expenses
Selling
This year, unit sales of 220,000 are expected to increase by 25 percent; material and labor costs are expected to increase by 10 percent per unit. Overhead is applied to production based on a percentage of direct
labor costs. Fixed selling expenses total $52,800; the remainder varies with sales dollars. All administrative costs are fixed.
Management desires to earn 10 percent on sales this year and will adjust the unit selling price if necessary. Develop a budgeted income statement for the year for Cooper Company that incorporates the indicated
changes.
Note: Do not use negative signs with your answers.
Note: After calculating your selling price per unit, round your answer to two decimal places and use this rounded amount to calculate sales in total.
$
$
$2,200,000
$
$
492,800
$167,200
Administrative
Income before taxes $
0
0
0
0
0
0
0
0
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