Asked by Melainah Alford on Jun 04, 2024
Verified
In September 2016 the budget committee of Jason Company assembles the following data:
1. Expected Sales October $1,800,000 November 1,700,000 December 1,600,000\begin{array} { l r } \text { October } & \$ 1,800,000 \\\text { November } & 1,700,000 \\\text { December } & 1,600,000\end{array} October November December $1,800,0001,700,0001,600,000
2. Cost of goods sold is expected to be 60% of sales.
3. Desired ending merchandise inventory is 20% of the next month's cost of goods sold.
4. The beginning inventory at October 1 will be the desired amount.
Instructions
Prepare the budgeted income statement for October through gross profit on sales including a cost of goods sold schedule.
Cost of Goods Sold
An expense representing the total cost of materials and labor directly associated with the production of goods sold by a business.
Merchandise Inventory
The goods a company intends to sell to customers that are considered current assets on the balance sheet.
Gross Profit
The difference between sales revenue and the cost of goods sold before deducting overheads, payroll, taxation, and interest payments.
- Apprehend the critical principles and approaches used in the creation of financial forecasts, specifically balance sheets and income statements.
- Compute and understand the importance of budgeted sales, cost of goods sold, and gross profit.
Verified Answer
Learning Objectives
- Apprehend the critical principles and approaches used in the creation of financial forecasts, specifically balance sheets and income statements.
- Compute and understand the importance of budgeted sales, cost of goods sold, and gross profit.
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