Oregon Weights manufactures a specialty precision scale. For January, the company expects to sell 1 comma 500 scales at an average price of $ 2 comma 320 per unit. The average manufacturing cost of each unit sold is $ 1 comma 420. Variable operating expenses for the company will be $ 1.40 per unit sold and fixed operating expenses are expected to be $ 7 comma 600 for the month. Monthly interest expense is $ 3 comma 300. The company has a tax rate of 40 % of income before taxes. Prepare Oregon Weights's budgeted income statement for January.

Explanation:

The preparation of income statement for January is shown below:-

Particulars                             Computation             Amount

Sales                                     1,500 × $2,320        $3,480,000

Less: Cost of Goods sold    1,500 × $1,420          $2,130,000

Gross Profit                                                             $1,350,000

Less: Operating expenses

Variable portion                    1,500 × $1.40            $2,100

Fixed operating expenses                                      $7,600

Operating income                                                    $1,340,300

Less: Interest expense                                             $3,300

Income tax expense ($1,340,300 - $3,300) × 40%  $534,800

Net income                                                                 $802,200