STUDENT/TEAM Income Statement The income statement is a financial report summarizing a firm's revenue and expenses for a period. It is prepared in two main steps: 1. Start with total revenue, and subtract cost of goods sold to calculate gross margin. 2. Subtract total expenses from gross margin to calculate net profit The report is typically broken into three sections. The top section shows the total revenue, cost of goods sold, and gross margin. This section captures revenues and costs that vary with unit sales. The middle section lists all expenses connected with marketing the product, and shows the total. A budget is set for these expenses each period, and they do not vary with the number of units sold. The last section, the bottom line, shows the net profit or loss. Your task is to create an income statement for a company that had the following results last period. Use the outline provided to assist you. Units sold Unit cost Price 100,000 $40 $90 $1,800,000 5 salespeople @ $80,000 each 1,200,000 $700,000 Personal selling Dealer promotions Advertising $1,500,000 Product development INCOME STATEMENT (units sold x price) (units sold x unit cost (revenue- cost of goods sold) Revenue Cost of Goods Sold Gross Margin: EXPENSES Total Expenses: (sum expenses) Net Profit gross margin- total expenses)