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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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