Sysco Merchandising Firm is developing its budgets for Year 2. The Year 1 income statement is as follows:
$$\begin{array} { l r }
\text { Sales (200,000 units) } & \$ 500,000 \
\text { Less Cost of goods sold } & \underline{325,000} \
\text { Gross profit } & \$ 175,000 \
\text { Operating expenses (includes } \$ 20,000 \text { of depreciation) } & \underline{120,000} \
\text { Net income } & \underline{\underline{\$ 55,000}}
\end{array}$$ Selling prices will increase by 10 percent, and sales volume in units will decrease by 6 percent. The cost of goods sold as a percent of sales will decrease to 62 percent. Other than depreciation, all operating costs are variable.
Prepare a budgeted functional income statement for Year 2.

Question

Sysco Merchandising Firm is developing its budgets for Year 2. The Year 1 income statement is as follows:
 $$\begin{array} { l r } 
\text { Sales (200,000 units) } & \$ 500,000 \
\text { Less Cost of goods sold } & \underline{325,000} \
\text { Gross profit } & \$ 175,000 \
\text { Operating expenses (includes } \$ 20,000 \text { of depreciation) } & \underline{120,000} \
\text { Net income } & \underline{\underline{\$ 55,000}}
\end{array}$$ Selling prices will increase by 10 percent, and sales volume in units will decrease by 6 percent. The cost of goods sold as a percent of sales will decrease to 62 percent. Other than depreciation, all operating costs are variable.
Prepare a budgeted functional income statement for Year 2.

Quizplus · Accepted Answer

The Answer of Sysco Merchandising Firm is developing its budgets for Year 2. The Year 1 income statement is as follows:
 $$\begin{array} { l r } 
\text { Sales (200,000 units) } & \$ 500,000 \
\text { Less Cost of goods sold } & \underline{325,000} \
\text { Gross profit } & \$ 175,000 \
\text { Operating expenses (includes } \$ 20,000 \text { of depreciation) } & \underline{120,000} \
\text { Net income } & \underline{\underline{\$ 55,000}}
\end{array}$$ Selling prices will increase by 10 percent, and sales volume in units will decrease by 6 percent. The cost of goods sold as a percent of sales will decrease to 62 percent. Other than depreciation, all operating costs are variable.
Prepare a budgeted functional income statement for Year 2.

Sysco Merchandising Firm Is Developing Its Budgets for Year 2