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Selling and Administrative Budget and Budgeted Income Statement. (The previous problem must be completed before working this problem.) Sports Bars, Inc., produces energy bars. Management estimates all selling and administrative costs are fixed. Quarterly selling and administrative cost estimates for the coming year follow.

Salaries	$170,000
Rent	$ 65,000
Advertising	$120,000
Depreciation	$ 75,000
Other	$ 36,000

Required:

1. Use the information presented previously to prepare a selling and administrative budget. Refer to the format shown in Figure 9.8.

2. Use the information from the previous problem and from requirement a of this problem to prepare a budgeted income statement. Refer to the format shown in Figure 9.9.

3. How will management use the information presented in the budgeted income statement?

4. 

5. 

Figure 9.8 Selling and Administrative Budget for Jerry's Ice Cream *Deduct depreciation to get the actual cash payment for selling and administrative costs. **This information is needed for the cash budget presented in Figure 9.11. Jerry's Ice Cream Selling and Administrative Budget Year Ending December 31 Year Salaries Rent Advertising Depreciation Other Total selling administrative costs Deduct depreciation* Cash payments for selling and administrative** $ 40,000 8,000 5,000 3,000 2,000 $ 58,000 (3,000) $ 55,000 Quarter 2 3 $ 40,000 $ 40,000 8,000 8,000 5,000 5,000 3,000 3,000 2,000 2,000 $ 58,000 $ 58,000 (3,000) (3,000) $ 55,000 $ 55,000 $ 40,000 8,000 5,000 3,000 2,000 $ 58,000 (3,000) $ 55,000 $ 160,000 32,000 20,000 12,000 8,000 $ 232,000 (12,000) $ 220,000 Figure 9.9 Budgeted Income Statement for Jerry's Ice Cream *Cost of goods sold = Per unit cost of $4.50 (see above) Units sold (from Figure 9-3); for the first quarter, $180,000 cost of goods sold = $4.50 unit cost x 40,000 units. Jerry's Ice Cream Budgeted Income Statement Year Ending December 31 Quarter 2 Sales Deduct costs of goods sold Gross margin Deduct selling and administrative costs Net income $ 240,000 (180,000) $ 60,000 (58,000) $ 2,000 $ 288,000 (216,000) $ 72,000 (58,000) $ 14,000 $360,000 (270,000) $ 90,000 (58,000) $ 32,000 $ 312,000 (234,000) $ 78,000 (58,000) $ 20,000 Year $1,200,000 (900,000) $ 300,000 (232,000) $ 68,000 Year Per unit cost of goods sold calculation: Direct materials Direct labor Manufacturing overhead Total cost of goods sold per unit $ 2.00 1.30 1.20 $ 4.50