Problem 23-4A Preparation and analysis of budgeted income statements L.O. C2, P2

Lilliput, a one-product mail-order firm, buys its product for $60 per unit and sells it for $130 per unit. The sales staff receives a 10% commission on the sale of each unit. Its December income statement follows.

LILLIPUT COMPANY Income Statement For The Month Ended December 31, 2011
Sales	$	1,300,000
Cost of goods sold		600,000
Gross profit		700,000
Expenses
Sales commissions (10%)		130,000
Advertising		200,000
Store rent		24,000
Administrative salaries		40,000
Depreciation		50,000
Other expenses		12,000
Total expenses		456,000
Net income	$	244,000

Management expects December