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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

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

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