Cost & Management Accounting Lecture-37

Income Statement Sales xxx Less Cost of goods sold (xxx) Gross profit xxx Less Operating expenses Administrative expenses xxx Selling expenses xxx xxx Profit from operation xxx Less Financial charges (xxx) Add Other income xxx Profit before tax xxx It will appear one by one means First sales Second Cost of goods sols Third gross profit and so on.

Budgeted Income Statement Sales 3,60,000 Less Cost of goods sold Direct material 72,000 Direct labor 96,000 Fixed FOH 64,000 Variable FOH 48,000 Cost of goods manufactured 2,80,000 Add opening finished goods inventory (60,000) Less Closing finished goods inventory 40,000 Cost of goods sold 3,00,000 Gross profit 60,000 Less Operating expenses Selling expenses Fixed 5,000 Variable 10,000 15,000 Administrative expenses Fixed 12,000 Variable 8,000 20,000 35,000 Profit from operation 25,000 Less Financial charges 5,000 Profit before tax 20,000 x 40% Less Tax 8,000 Budgeted Net Profit 12,000 Same the data in last slide will appear in this slid First Sales Second Cost of goods sold and so on At end the tax rate that is 40%, it will appear after the appearance of 20,000 and than tax rate 40%