Poster Artist Ltd, a retail store selling classic and rare marketing materials, has just completed its master budget for the next fiscal year. Ending inventory is budgeted at 20% of cost of goods available for sale. Selected data from that process appear in the table below: $$\begin{array} { l l }
\text { Begirring irventory } & \$ 20,000 \
\text { Budgeted purchases } & 50,000 \
\text { Expected reverue } & 150,000 \
\text { Irflows of cash } & 120,000 \
\text { Support departments costs } & 30,000 \
\text { Total cash outflows } & 80,000
\end{array}$$ Which of the following amounts will be subtracted from gross profit on Poster Artist Ltd's budgeted income statement?

Question

Poster Artist Ltd, a retail store selling classic and rare marketing materials, has just completed its master budget for the next fiscal year. Ending inventory is budgeted at 20% of cost of goods available for sale. Selected data from that process appear in the table below: $$\begin{array} { l l } 
\text { Begirring irventory } & \$ 20,000 \
\text { Budgeted purchases } & 50,000 \
\text { Expected reverue } & 150,000 \
\text { Irflows of cash } & 120,000 \
\text { Support departments costs } & 30,000 \
\text { Total cash outflows } & 80,000
\end{array}$$ Which of the following amounts will be subtracted from gross profit on Poster Artist Ltd's budgeted income statement?

Quizplus · Accepted Answer

Support department costs of $30,000 will be subtracted from gross profit on the budgeted income statement as these are operating expenses.

Poster Artist Ltd, a Retail Store Selling Classic and Rare