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

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.

Correct Answer:

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