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Budgeted Income Statement - budgets For example to find the...

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Budgeted Income Statement The budgeted income statement is the important end-product of the operating budgets . This budget indicates the expected profitability of operations for the budget period. The budgeted income statement provides the basis for evaluating company performance . Budgeted income statements often act as a call to action. For example, a board member at XM Satellite Radio Holdings felt that budgeted costs were too high relative to budgeted revenues. When management refused to cut its marketing and programming costs, the board member resigned; he felt that without the cuts, the company risked financial crisis. As you would expect, the budgeted income statement is prepared from the various operating
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Unformatted text preview: budgets. For example, to find the cost of goods sold, it is first necessary to determine the total unit cost of producing one Kitchen-Mate, as follows. Illustration 20-12 Computation of total unit cost Hayes Company then determines cost of goods sold by multiplying the units sold by the unit cost. Its budgeted cost of goods sold is $660,000 (15,000 × $44). All data for the income statement come from the individual operating budgets except the following: (1) interest expense is expected to be $100, and (2) income taxes are estimated to be $12,000. Illustration 20-13 shows the budgeted income statement. Illustration 20-13 Budgeted income statement...
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