Microsoft Corporation is preparing its budget for the upcoming fiscal year. The following information is provided:
•Expected sales: $5,000,000
•Cost of Goods Sold: $3,000,000
•Operating Expenses: $1,250,000
•Interest Expense: $90,000
•Tax Rate: 25%
Required:
1.Prepare a budgeted income statement.
2.Calculate the expected net income.
3.Discuss the role of budgeting in Microsoft's strategic planning.