Outdoor Outfitters has created a flexible budget for the70,000-unit and the 80,000-unit levels of activity shown asfollows. Complete Outdoor Outfitters's flexible budget at the105,000-unit level of activity. Assume that the cost of goods soldand variable operating expenses vary directly with sales and thatincome taxes remain at 30 percent of operating income.
| 70,000 Units | | 80,000 Units | | 105,000-units |
Sales | $ | 1,400,000 | | $ | 1,600,000 | | |
Cost of goods sold | | 840,000 | | | 960,000 | | |
| | | | | | | |
Gross profit on sales | $ | 560,000 | | | 640,000 | | |
Operating expenses ($90,000 fixed) | | 370,000 | | | 410,000 | | |
| | | | | | | |
Operating income | $ | 190,000 | | $ | 230,000 | | $ |
Income taxes (30% of operating income) | | 57,000 | | | 69,000 | | |
| | | | | | | |
Net income | $ | 133,000 | | $ | 161,000 | | $ |
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