UT4 Review Question
Janus Inc.’s Income statement for the third quarter just ended September 30, 2022 is as follows:
JANUS INC.
Budgeted Income Statement
For the quarter ended September 30, 2022
Sales
$
180,000
Cost of goods sold
108,000
Gross margin
72,000
Selling and admin expenses:
Commission expense
$
18,000
Salaries expense
9,000
Warehouse storage expense
7,500
Rent expense
6,000
Depreciation expense
3,900
Utilities expense
2,400
Total selling and admin expense
46,800
Net income
$
25,200
Sales units sold
900
Additional information:
– Current sales price is $200 per unit
– Sales units sold are always budgeted at 300 units per month
– Current purchase price for these units from the supplier is $120 per unit (this is the COGS)
– Sales commissions are paid at 10% x sales dollars
– Salaries, Warehouse storage, Rent, Depreciation and Utilities are all fixed costs per month.
Management would like to change a few things when preparing the budget for the last quarter of the year:
1) Increase the sales price per unit by $15.00 per unit
2) Decrease the units sold by 10% per month
3) Purchase a new truck for $40,000, which will add an incremental depreciation expense of $500 per mon
Sales Budget
Oct
Nov
Dec
Total
Total Sales
Purchases Budget
Prepare the necessary budgets to be able to build a budgeted income statement
for the 4th quarter.
