Question
[The following information applies to the questions displayed below.] Baskin Promotions, Inc. sells T-shirts decorated for a variety of concert performers. The company has developed
[The following information applies to the questions displayed below.]
Baskin Promotions, Inc. sells T-shirts decorated for a variety of concert performers. The company has developed the following budget for the coming year based on a sales forecast of 88,000 T-shirts:
Sales | $ | 1,547,040 | |
Cost of Goods Sold | 909,040 | ||
Gross Profit | 638,000 | ||
Operating Expenses ($100,000 is fixed) | 450,240 | ||
Operating Income | 187,760 | ||
Income Taxes (30% of operating income) | 56,328 | ||
Net Income | $ | 131,432 | |
Cost of goods sold and variable operating expenses vary directly with sales, and the income tax rate is 30% at all levels of operating income.
If the concert season is slow due to poor weather, Baskin estimates that sales could fall to as low as 68,000 T-shirts.
n a flexible budget for sales of 68,000 T-shirts, how much would Baskin budget for operating expenses?
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