Budgeted Income Statement for Fortune, Inc. for the First Quarter

What is the budgeted income statement for Fortune, Inc. for the first quarter?

Budgeted Income Statement:

Sales revenue: $3,750,000

Cost of goods sold: $1,800,000

Gross profit: $1,950,000

Expenses:

  • Commission: $375,000
  • Advertising: $412,500
  • Office salaries: $222,000
  • Depreciation: $165,000
  • Interest expense: $10,075

Total expenses: $1,184,575

Net income: $765,425

Explanation:

Data and Calculations:

The selling price per unit is $25, and the forecasted sales units are 40,000 for January, 60,000 for February, and 50,000 for March, totaling 150,000 units for the quarter. This results in sales revenue of $3,750,000 ($25 * 150,000).

The cost of goods sold is $12 per unit, equating to $1,800,000 for the quarter (150,000 * $12).

Commissions are 10% of sales dollars, amounting to $375,000 ($3,750,000 * 10%). Rent is $17,000 per month, totaling $51,000 for the quarter.

Advertising costs are 11% of sales dollars, leading to $412,500 ($3,750,000 * 11%). Office salaries are $74,000 per month, resulting in $222,000 for the quarter.

Depreciation is $55,000 per month, totaling $165,000 for the quarter. Interest expense is 13% annually on a $210,000 note payable, resulting in $10,075 for the quarter ($210,000 * 13% * 1/4).

← Comparing loan options for different loan amounts The power of financial management achieving your goals →