Quality Wool Company, a merchandising company, is developing its master budget for 2018. The income statement for 2017 is as follows:

The following are management’s goals and forecasts for 2018:
. Selling prices will increase by 6 percent, and sales volume will increase by 4 percent.
. The cost of merchandise will increase by 3 percent.
. All operating expenses are fixed and are paid in the month incurred. Price increases for operating expenses will be 10 percent. The company uses straight-line depreciation.
4. The estimated uncollectibles are 2 percent of budgeted sales.
WN Required
Prepare a budgeted functional income statement for 2018.

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Gross sales... QUALITY WOOL COMPANY Income Statement For Year Ending December 31, 2017 Less estimated uncollectible accounts. Net sales..... Cost of goods sold.. Gross profit..... Operating expenses (including $35,000 depreciation). Net income. $1,000,000 (10,500) 989,500 (580,000) 409,500 (250,500) $ 159,000