Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Collaborative Auditing

Authors: James Pelletier, Yuki Matsuura

2nd Edition

0894139606, 9780894139604

More Books

Students also viewed these Accounting questions