Question
Cookie Co. expects to maintain the same inventories at the end of 20Y9 as at the beginning of the year. The total of all production
Cookie Co. expects to maintain the same inventories at the end of 20Y9 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows:
Estimated Fixed Cost | Estimated Variable Cost (per unit sold) | ||||||
Production costs: | |||||||
Direct materials | $26 | ||||||
Direct labor | 17 | ||||||
Factory overhead | $110,600 | 13 | |||||
Selling expenses: | |||||||
Sales salaries and commissions | 23,000 | 6 | |||||
Advertising | 7,800 | ||||||
Marketing | 1,700 | ||||||
Miscellaneous selling expense | 1,900 | 5 | |||||
Administrative expenses: | |||||||
Office and officers' salaries | 22,500 | ||||||
Supplies | 2,800 | 2 | |||||
Miscellaneous administrative expense | 2,500 | 3 | |||||
Total | $172,800 | $72 |
It is expected that 6,400 units will be sold at a price of $144 a unit. Maximum sales within the relevant range are 8,000 units.
Prepare an estimated income statement for 20Y9.
Cookie Co.
Income Statement
For the Year Ended December 31, 20Y9
Cost of Goods Sold: | |||
Total cost of goods sold | |||
Gross profit | |||
Expenses | |||
Selling expenses: | |||
Total selling expenses | |||
Administrative expenses | |||
Total admin expenses | |||
Total expenses | |||
Operating Income |
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