Garry, INC.

Budgeted Income Statement

For the Year Ending June 30, 2016

($000 omitted)

Sales

$34,000

Cost of goods sold

Variable

$10,200

Fixed

3,250

13,450

Gross profit

$20,550

Selling and administrative costs

Commissions

$5,440

Fixed advertising cost

3,400

Fixed marketing salaries

500

Fixed administrative cost

6,500

15,840

Operating income

$4,710

Income taxes (@ 30 percent)

1,413

After-tax income

$3,297

1. Determine the breakeven point in dollars for 2016.

2.What is the required sales dollars if desired profit is to increase by 10% over the budgeted

pre-tax profit?

3.What is the indifference point between reducing the commissions to 10% of sales dollars,

and at the same time increasing total fixed cost per year by $2.4 million, relative to the current

budget?