Godfrey Company prepared the following budgeted income statement for 2019:

Godfrey Company
Budgeted Income Statement
For the Year Ended December 31, 2019
Unit sales	1,200
Sales Revenue ($550 per unit)	$660,000
Cost of Goods Sold (50% of sales)	330,000
Gross Profit	330,000
Selling and Administrative Expenses (20% of sales)	132,000
Operating Income	$198,000

Requirement 1. Prepare a budgeted income statement with columns for 500 units,1,200 units, and 1,600 units sold.

Godfrey Company

Budgeted Income Statement

For the Year Ended December 31, 2019

Unit sales	500
Sales Revenue
Cost of Goods Sold
Gross Profit
Selling and Administrative Expenses
Operating Income

1,200

1,600

Requirement 2. How might managers use this type of budgeted income statement?

The budgeted income statement prepared in Requirement 1 is a

flexible

static

budget. It allows

GodfreyGodfrey's

managers to plan for

only a single

various

sales level(s).

Requirement 3. How might spreadsheet software such as Excel assist in this type of analysis?

Technology, such as Excel spreadhseet software, makes it more

cost-effective

time-consuming

to conduct

financial statement analysis

sensitivity or "what-if" analysis

and prepare a company's

annual report.

master budget.

If managers have a better understanding of how changes in sales volume and costs are likely to affect

net income

the annual report

, they can

maintain the same course of action

react quickly and make changes if key assumptions turn out to be wrong.