Microsoft is planning to launch a new software product. The following budgeted information is available:

• Sales Revenue: $5,000,000
• Cost of Goods Sold: $2,000,000
• Operating Expenses: $1,000,000
• Research and Development Expenses: $500,000
• Marketing Expenses: $700,000

Requirements:

1. Prepare the Budgeted Income Statement for the new product.
2. Calculate the expected Net Profit.
3. Prepare a Flexible Budget for sales revenue scenarios of $4,000,000, $5,000,000, and $6,000,000.
4. Perform a variance analysis comparing the flexible budget with the actual results if actual sales were $4,500,000.