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Question(s) / Instruction(s):

145.     Leno Company is developing its budgets for 20X0. The current      income statement is as follows:

Sales (100,000 units)

$450,000

 

 

Less: Cost of goods sold

315,000

 

 

Gross profit

$135,000

 

 

Less: Operating expenses (includes

 

 

$10,000 of Depreciation)

103,500

 

 

Net income

$31,500

 

Variable operating expenses are 16% of sales. Leno Company is considering a sales promotion that will cost $20,000 and could increase sales by 10%.

Required:

     Prepare a budgeted income statement for 20X0. Comment on      Leno Company’s plan.

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