Corporation is preparing its budgeted income statement for the month of August. Budgeted sales are $18,000. Cost of goods sold is twice the amount of operating costs, and operating costs plus cost of goods sold equals 40% of net income. Return on sales (net income / sales) is anticipated to be 50%. TNR does not have any nonoperating items on its income statement.
TNR's budgeted operating costs are:
A) $3,600
B) $2,400
C) $1,200
D) None of the above

Question

Quizplus · Accepted Answer

Net income is 50% of sales, which is $9,000. Operating costs plus cost of goods sold equals 40% of net income, which is $3,600. Since cost of goods sold is twice the operating costs, operating costs are $1,200.

Corporation Is Preparing Its Budgeted Income Statement for the Month