GCQ Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force
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GCQ Company is a small but growing manufacturer of telecommunications equipment. The company has no sales force of its own. Rather, it relies completely on independent sales agents to market its products. These agents are paid a commission of 15% of selling price for all items sold. Inday, GCQ's controller, has just prepared the company's budgeted income statement for next year. The statement follows:
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HL Sales DAVAO CITY 1046 ANAD GCQ Company Budgeted Income Statement For the year ended December 31 Less: Manufacturing Costs Variable Fixed overhead* Gross Profit Less: Operating Expenses Marketing Expenses Commissions to agents rsity of Mind16,000,000 7,200,000 2,340,000 9,540,000 P 6,460,000 120,000 2,400,000 Fixed marketing costs Fixed Administrative Expenses Operating Income Less: Fixed Interest Cost Income before income taxes Less: Income Tax (30%) Net Income *primarily depreciation on storage facilities 2,520,000 1,800,000 P 2,140,000 540,000 1,600,000 480,000 P 1,120,000 HL Sales DAVAO CITY 1046 ANAD GCQ Company Budgeted Income Statement For the year ended December 31 Less: Manufacturing Costs Variable Fixed overhead* Gross Profit Less: Operating Expenses Marketing Expenses Commissions to agents rsity of Mind16,000,000 7,200,000 2,340,000 9,540,000 P 6,460,000 120,000 2,400,000 Fixed marketing costs Fixed Administrative Expenses Operating Income Less: Fixed Interest Cost Income before income taxes Less: Income Tax (30%) Net Income *primarily depreciation on storage facilities 2,520,000 1,800,000 P 2,140,000 540,000 1,600,000 480,000 P 1,120,000
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