Christy Enterprises Reports the Year-End Information from 2015 as Follows

question 89

Essay

Christy Enterprises reports the year-end information from 2015 as follows:
$\begin{array}{lr}\text { Sales }(100,000 \text { units) } & \$ 500,000 \\\text { Less: Cost of goods sold } & 300,000 \\\text { Gross profit } & 200,000 \\\text { Operating expenses (includes } \$ 20,000 \text { of Depreciation) } & 120,000\\\text { Net income }&\$80,000\end{array}$ Christy is developing the 2016 budget.In 2016 the company would like to increase selling prices by 10%,and as a result expects a decrease in sales volume of 5%.Cost of goods sold as a percentage of sales is expected to increase to 62%.Other than depreciation,all operating costs are variable.
Required:
Prepare a budgeted income statement for 2016.

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Definitions:

Break-even Point

The point at which total costs and total revenue are equal, resulting in no net loss or gain for a business.

Gross Profit

The financial difference between the revenue generated from sales and the cost of goods sold, before deducting overheads, salaries, and other expenses.

Lodging And Meals

Expenses related to accommodation and food incurred during travel or business trips.

Break-even Analysis

is a financial calculation to determine the point at which revenue received equals the costs associated with receiving the revenue, indicating no profit or loss.