Budgeted Income Statement for Fortune, Inc.

Overview

Fortune, Inc. is preparing its master budget for the first quarter. The company sells a single product at a price of $25 per unit. Sales (in units) are forecasted at 43,000 for January, 63,000 for February, and 53,000 for March. Cost of goods sold is $12 per unit. Here are the other expense information for the first quarter:

• Commissions: 11% of sales dollars
• Rent: $23,000 per month
• Advertising: 10% of sales dollars
• Office salaries: $72,000 per month
• Depreciation: $54,000 per month
• Interest: 13% annually on a $300,000 note payable
• Tax rate: 30%

Budgeted Income Statement

To prepare the budgeted income statement for the first quarter, we need to calculate the total sales revenue and the cost of goods sold. The total sales revenue can be calculated by multiplying the sales volume for each month by the selling price per unit. The cost of goods sold can be calculated by multiplying the sales volume for each month by the cost per unit. Other expenses, such as selling and administrative expenses, are also included in the income statement. By subtracting the cost of goods sold and other expenses from the total sales revenue, we can calculate the net income for each month and the overall net income for the first quarter.