Question

Fielding Motors is a chain of car dealerships. Sales in the fourth quarter of last year were $3,700,000. Suppose management projects that its current year's quarterly sales will increase by 2% in quarter 1, by another 4% in quarter 2, by another 5% in quarter 3, and by another 7% in quarter 4. Management expects cost of goods sold to be 45% of revenues every quarter, while operating expenses should be 30% of revenues during each of the first two quarters, 35% of revenues during the third quarter, and 25% during the fourth quarter Requirement Prepare a budgeted income statement for each of the four quarters and for the entire year. Prepare the first portion of the budgeted income statement through gross proft, then complete the statement. (Round the amounts to the nearest whole dollar.) Fielding Motors Budgeted Income Statement For the upcoming Year Quarter 1 Quarter 2 Quarter 3 Quarter 4 Ye Sales Less: Cost of goods sold Gross proft

Answer 1

Solution

Fielding Motors
Budgeted Income statement
	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Year
Sales	$        3,774,000	$        3,924,960	$        4,121,208	$               4,409,693	$   16,229,861
Cost of goods sold	$        1,698,300	$        1,766,232	$        1,854,544	$               1,984,362	$      7,303,437
Gross profit	$        2,075,700	$        2,158,728	$        2,266,664	$               2,425,331	$      8,926,423
Operating expense	$        1,132,200	$        1,177,488	$        1,442,423	$               1,102,423	$      4,854,534
Operating income	$            943,500	$            981,240	$            824,242	$               1,322,908	$      4,071,889