Budgeted Income Statement:
Definition and Explanation:
A budgeted income statement can be prepared from the data developed in:
- Sales budget
- Ending finished goods inventory budget
- Selling and administrative expense budget
- Cash budget
The budgeted income statement is one of the key schedules in the budget process.
It shows the company’s planned profit for the upcoming budget period, and it stands as a benchmark against which subsequent company performance can be measured.
Example | Sample of Budgeted Income Statement:
Following schedule contains the budgeted income statement for Hampton Freeze Inc.
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Hampton Freeze Inc. |
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Other Budgets References |
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| Sales | Sales budget | $2,000,000 |
| Less cost of goods sold* | Sales budget, Ending finished goods inventory budget | 1,300,000 |
| ————– | ||
| Gross margin | 700,000 | |
| Less selling and administrative expenses | Selling and administrative expense budget | 577,800 |
| ————– | ||
| Net operating income | 122,200 | |
| Less interest expense | Cash budget | 14,000 |
| ————– | ||
| Net income | $108,200 | |
| ====== | ||
You may also be interested in other articles from “Budgeting and planning” chapter:
- Profit Planning
- Participative or Self Imposed budgeting
- Human Factors in Budgeting
- Zero Based Budgeting (ZBB)
- Budget Committee
- Master Budget
- Sales Budget
- Production Budget
- Inventory Purchases Budget for a Merchandising Firm
- Material Budgeting | Direct Materials Budget
- Labor Budget
- Manufacturing Overhead Budget
- Ending Finished Goods Inventory Budget
- Selling and Administrative Expense Budget
- Cash Budget
- Budgeted Income Statement
- Budgeted Balance Sheet
- International Aspects of Budgeting
Jennifer edwards