16.

Baskin Promotions, Inc. sells T-shirts decorated for a variety of concert performers. The company has developed the following budget for the coming year based on a sales forecast of 80,000 T-shirts:

Sales	$	1,400,000
Cost of Goods Sold		820,000
Gross Profit		580,000
Operating Expenses ($100,000 is fixed)		418,400
Operating Income		161,600
Income Taxes (30% of operating income)		48,480
Net Income	$	113,120

Cost of goods sold and variable operating expenses vary directly with sales, and the income tax rate is 30% at all levels of operating income. If the concert season is slow due to poor weather, Baskin estimates that sales could fall to as low as 60,000 T-shirts.

In a flexible budget for sales of 60,000 T-shirts, how much would Baskin budget for operating expenses?

Group of answer choices

$218,400

$238,800

$338,800

$418,400