Cycle-1 is a fast-growing start-up firm that manufactures bicycles. The following income statement is available for October:

Sales revenue (300 units @ $600 per unit)	$180,000
Less
Manufacturing costs
Variable costs	$26,000
Depreciation (fixed)	$27,540
Marketing and administrative costs
Fixed costs (cash)	$67,500
Depreciation (fixed)	$22,860
Total costs	$143,900
Operating profits	$36,100

Sales valume is expected to increase by 20% in November, but the sales price is expected to fall 10%. Variable manufacturing costs are expected to increase by 4% per unit in November. In addition to these cost changes, variable manufacturing casts also will change with sales volume. Marketing and administrative cash costs are expected to increase by 8%.

Cycle-1 operates on a cash basis and maintains no inventories. Depreciation is fixed and should remain unchanged over the next three years.

Required

Prepare a budgeted income statement for November.

Answer rating: 100% (QA)

Income that is budgeted for November Revenue from sales300... View the full answer