Pinnacle Engineering, an acclaimed chemical engineering team of engineers, chemists, and other scientists, had the following income in 2017:

The following changes are expected in 2018:
1. The company is expecting a 12 percent increase in revenues because of increasing demand in the marketplace for its services.
2. Training costs are expected to increase by $50,000.
3. Supplies are expected to increase to 8 percent of revenue.
4. Phone, fax, accounting services, and insurance amounts will stay the same.
5. Depreciation expense will increase by $9,000 per year, since the company is planning to purchase equipment for $75,000.
6. Pinnacle is planning to hire a laboratory technician at a salary of $36,000 per year.
7. Utilities and miscellaneous expenses are expected to increase next year by 10 percent.
8. Taxes on income will be 40 percent.
Required
Prepare a budgeted income statement for Pinnacle Engineering for fiscal year 2018.

Transcribed Image Text:

Revenue $3,550,000 Less operating expenses: Salaries $2,400,000 Accounting services Training Supplies Phone and fax 63,000 182,000 175,000 3,850 Insurance 303,000 Depreciation Utilities 220,000 35,000 Miscellaneous 7,100 Total operating expenses 3,388,950 161,050 Income before taxes Less taxes on income 64,420 Net income 96,630