Baskin Promotions, Inc. sells T-shirts decorated for a variety of concert perfor
ID: 2491750 • Letter: B
Question
Baskin Promotions, Inc. sells T-shirts decorated for a variety of concert performers. The company has developed the following budget for the coming year based on a sales forecast of 81,000 T-shirts:
Cost of goods sold and variable operating expenses vary directly with sales, and the income tax rate is 30% at all levels of operating income.
If the concert season is slow due to poor weather, Baskin estimates that sales could fall to as low as 61,000 T-shirts.
$242,780.
$342,780.
$422,380.
$322,380.
$6.02
$10.26.
$17.51.
Some other amount.
3. Assume Baskin actually achieves the 61,000 unit sales level, and that net income actually earned at this level was $72,300. A performance report would indicate that net income was:
$2,671 over budget.
$43,109 under budget.
$15,939 under budget.
At the budgeted level.
Baskin Promotions, Inc. sells T-shirts decorated for a variety of concert performers. The company has developed the following budget for the coming year based on a sales forecast of 81,000 T-shirts:
Sales $ 1,418,310 Cost of Goods Sold 831,060 Gross Profit 587,250 Operating Expenses ($100,000 is fixed) 422,380 Operating Income 164,870 Income Taxes (30% of Operating income) 49,461 Net Income $ 115,409Cost of goods sold and variable operating expenses vary directly with sales, and the income tax rate is 30% at all levels of operating income.
If the concert season is slow due to poor weather, Baskin estimates that sales could fall to as low as 61,000 T-shirts.
Explanation / Answer
1) option 2 is correct answer
2)
$ 10.26 ( 831,060/81,000)
3)
$ 43,109 under budget budgeted income = 115,409 actual = 72,300 ( 115,409-72,300)
Fixed expense 100,000 variable expense 322,380 units 81,000 per unit variable expense 3.98 For 61000 units variable expense 242,780 Fixed expense 100,000 342,780