Associated Corporation is developing its budgets for the year 2021. The estimated 2020 income statement is as follows:

Associated Corporation

Income Statement

December 31, 2020

Sales (25,000 units) $250,000

Less: Cost of goods sold 100,000

Gross profit $150,000

Operating expenses (includes $5,000 of Depreciation) 100,000

Net income $ 50,000

Selling prices will increase by 20 percent and sales volume in units will decrease by 10 percent. The cost of goods sold as a percent of sales will increase to 45 percent. Other than depreciation, all operating costs are variable.

Required:

Prepare a budgeted income statement for 2021.