US CMA Part 1 · Chapter 2 · Question 25 of 30
A pro forma income statement is being prepared. Budgeted sales are $2,400,000, cost of goods sold is 60% of sales, selling and administrative expenses (including depreciation) are $520,000, and interest expense is $40,000. The income tax rate is 25%. What is budgeted net income?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $300,000
Explanation
Gross profit = $2,400,000 x 40% = $960,000. Income before tax = $960,000 - $520,000 - $40,000 = $400,000. Net income = $400,000 x (1 - 25%) = $300,000.
More Planning, Budgeting and Forecasting MCQs
- Q27A financial planning model is used to show how budgeted operating income would change if the selling price fell by 5% while all other…
- Q28How do strategic plans typically differ from operational plans?
- Q29Within a master budget, which of the following is part of the financial budget rather than the operating budget?
- Q30A budgeting and performance evaluation system is said to achieve goal congruence when:
- Q1In a SWOT analysis for a regional coffee chain, which item would be classified as a threat?