a. Sales for the final quarter of the prior year total 1,100 units. Expected sales (in units) for the current year are: 990 (Quarter 1), 660 (Quarter 2), 880 (Quarter 3), and 880 (Quarter 4). Sales for the first quarter of the following year total 1,320 units. The selling price is $690 per unit in the first three quarters of the year, and $720 per unit in the final quarter. b. Company policy calls for a given quarter's ending finished goods inventory to equal 50% of the next quarter's expected unit sales. The finished goods inventory at the end of the prior year is 495 units, which complies with the policy. The product's manufacturing cost is $183 per unit, including per unit costs of $104 for materials (8 lbs. at $13 per lb.), $54 for direct labor (3 hours * $18 direct labor rate per hour), $21 for variable overhead, and $4 for fixed overhead. Annual fixed overhead consists, incurred evenly throughout the year, consist of depreciation on production equipment, $5,700; factory utilities, $7,200, and other factory overhead of $1,400. C. Company policy also calls for a given quarter's ending raw materials inventory to equal 30% of next quarter's expected materials needed for production. The prior year-end inventory is 1,980 lbs of materials, which complies with the policy. The company expects to have 3,168 lbs. of materials in inventory at year-end. The company has no work in process inventory at the end of any quarter. d. Sales representatives' commissions are 14% of sales and are paid in the quarter of the sales. The sales manager's quarterly salary will be $65,000 in the first three quarters of the year, and $69,000 in the final quarter. Quarterly general and administrative expenses include $28,000 administrative salaries, rent expense of $17,000 per quarter, insurance expense of $14,000 per quarter, straight- line depreciation of $14,000 per quarter, and 1% monthly interest on the $200,000 long-term note payable (12% annually). Income taxes will be assessed at 25%, and are paid in the quarter incurred. Requirement Prepare the Budgeted Income Statement for the year for Carter Inc. Interest on the $200,000 long-term note payable is 1% per month (12% annually). Income taxes will be assessed at 25%, and are paid in the quarter incurred. Carter Inc. Budgeted Income Statement For the year ended December 31, 2018 Sales Cost of goods sold Gross profit Operating expenses: Selling expenses Administrative expenses Interest expense Total operating expenses Income before income taxes Income tax expense Net income