Katie Enterprises

THE FOLLOWING INFORMATION APPLIES TO QUESTIONS 34 AND 35.

Katie Enterprises reports the year-end information from 20X4 as follows:

Sales (70,000 units)	$560,000
Cost of goods sold	210,000
Gross margin	350,000
Operating expenses	200,000
Operating income	$150,000

Katie is developing the 20X5 budget. In 20X5 the company would like to increase selling prices by 4%, and as a result expects a decrease in sales volume of 10%. All other operating expenses are expected to remain constant. Assume that COGS is a variable cost and that operating expenses are a fixed cost.

34.

What is budgeted sales for 20X5?

A) $582,400 B) $524,160 C) $504,000 D) $560,000