Wheels is an exotic car dealership. Sales in the fourth quarter of last year were $4,000,000. Suppose its Sherbrooke office projects that its current year’s quarterly sales will increase by 3% in quarter 1, by another 4% in quarter 2, by another 6% in quarter 3, and by another 5% in quarter 4. Management expects cost of goods sold to be 50% of revenues every quarter, while operating expenses should be 30% of revenues during each of the first two quarters, 25% of revenues during the third quarter, and 35% during the fourth quarter.
Requirement
Prepare a budgeted income statement for each of the four quarters and for the entire year.