Prepare the BUDGETED INCOME STATEMENT

Hom|40 ABC Company Budgeted Income Statement For the Year Ended December 31, 2020 5 Sales 6 Cost of goods sold 7 Gross margin 8 Selling and administrative expenses 9 Operating income 10 Interest expense 11 Net income ANH LA ABC Company Balance Sheet December 31, 2019 N o 5 Assets: Cash Accounts Receivable Raw Materials Inventory (5000 pounds) Finished Goods Inventory (2500 units) Equipment 11 Accumulated Depreciation 12 Total Assets 56,400 250,000 15,000 47,250 850,000 (212,500) 1,006,150 13 $ 14 Liabilities & Stockholders' Equity: 15 Accounts Payable 16 Common Stock 17 Retained Earnings 18 Total Liabilities & Stockholders' Equity 165,000 402,000 439.150 1,006,150 $ K14 C D F G 1 ABC Company 2 Assumptions 4 Sales: 5 Estimated Unit Sales: Q1 15,000 2020 Q2 40,000 Q3 18,000 Q4 24,000 2021 Q1 Q2 12,000 38,000 7 Selling Price per Unit 30.00 9 Expected Cash Collections: All Sales are on Account Collections in Quarter of Sale (12 Collections in Quarter Following Sale 70% 30% 14 Production Budget: 15 Desired Ending Inventory 15% of following quarter's budgeted sales (units) 16 17 Direct Materials Budget: 18 Raw materials required to produce one unit Desired raw materials on hand 20 Raw material costs 3 pounds 10% of following month's production needs 3.00 per pound $ 22 Expected Cash Payments 23 Payments in the Month of Purchase 24 Payments in the Month Following Purchase 25 75% 25% K14 $ 0.25 hours 20.00 26 Direct Labor Budget: 27 Direct Labor Required per Unit 28 Hourly Pay Rate 29 30 Manufacturing OH Budget: 31 Variable Manufacturing OH Rate 32 Fixed Manufacturing OH 33 Depreciation EA CA EA 3.00 per DLH. $ 99,911.25 per quarter $ 10,000 per quarter 34 36 35 Selling & Administrative Expense Budget Variable S&A Expense Rate Fixed S&A Expenses Depreciation GA GA GA 1.00 per unit sold 85,000 per quarter 5,000 per quarter $ 30.000 50,000 40 Cash Budget: Minimum cash balance Cash dividend each quarter Line of Credit: Quarterly Interest Rate Maximum Balance Borrowings occur on the first day of the quarter. Repayments occur on the last day of the quarter. 2.5% 150,000 45 $