The budgeted or pro forma income statement is prepared after the operating budgets have been completed. The cost of goods sold on the income statement is calculated using the per unit cost of $11.25, which consists of $1.40 per unit for direct materials, $7.00 per unit for direct labor, and a manufacturing overhead rate of $2.85. The overhead rate is calculated by multiplying the predetermined overhead rate of $5.70 per direct labor hour times the direct labor hours per unit of one-half hour.
|
Quantity
|
Unit Cost
|
Total Cost
|
|
Direct Materials
|
Various
|
$ 1.40
|
$ 1.40
|
|
Direct Labor
|
.5 hour
|
14.00
|
7.00
|
|
Manufacturing Overhead
|
.5 hour
|
5.70
|
2.85
|
|
Total Unit Cost
|
|
|
$11.25
|
|
Pickup Trucks Company Budgeted Income Statement For the Year 20X1
|
Sales (100,000 × $15)
|
|
$1,500,000
|
|
Cost of Goods Sold (100,000 × $11.25)
|
|
1,125,000
|
|
Gross Profit
|
|
375,000
|
|
Operating Expenses
|
|
|
|
Selling Expenses
|
$120,000
|
|
|
Administrative Expenses
|
81,000
|
|
|
Total Operating Expenses
|
|
201,000
|
|
Income from Operations
|
|
174,000
|
|
Interest Expense
|
|
2,880
|
|
Income before Income Taxes
|
|
171,120
|
|
Income Taxes (40%)
|
|
68,448
|
|
Net Income
|
|
$102,672
|
|
Current Liabilities
Budgets
