Baskin Promotions, Inc. sells T-shirts decorated for a variety of concert performers. The company has developed the
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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 77,000 T-shirts:
Sales | $ | 1,345,190 | |
Cost of Goods Sold | 786,940 | ||
Gross Profit | 558,250 | ||
Operating Expenses ($100,000 is fixed) | 406,460 | ||
Operating Income | 151,790 | ||
Income Taxes (30% of operating income) | 45,537 | ||
Net Income | $ | 106,253 | |
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 57,000 T-shirts.
1. In a flexible budget for sales of 57,000 T-shirts, how much would Baskin budget for operating expenses?
2. What unit cost did Baskin use in budgeting the cost of goods sold for the year?
Related Book For
Operations Management Creating Value Along the Supply Chain
ISBN: 978-0470525906
7th Edition
Authors: Roberta S. Russell, Bernard W. Taylor
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