Answer the following question(s)using the information below.Sherry and John Enterprises are using the Kaizen approach to budgeting for 2019.The budgeted income statement for January 2019 is as follows:
Under the Kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month.
-What is budgeted gross margin for March 2019?

Question

Answer the following question(s)using the information below.Sherry and John Enterprises are using the Kaizen approach to budgeting for 2019.The budgeted income statement for January 2019 is as follows:
  Under the Kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month.
-What is budgeted gross margin for March 2019?

Quizplus · Accepted Answer

To determine the budgeted gross margin for March 2019, we first need to determine the budgeted sales for March:
Budgeted sales for March = Budgeted sales for January x (1 + monthly sales growth rate)^(number of months between January and March)
= $1,200,000 x (1 + 0.02)^2
= $1,254,960

Next, we need to determine the budgeted cost of goods sold for March:
Budgeted cost of goods sold for March = Budgeted cost of goods sold for January x (1 - monthly cost reduction rate)^(number of months between January and March)
= $720,000 x (0.99)^2
= $709,704

Finally, we can calculate the budgeted gross margin for March:
Budgeted gross margin for March = Budgeted sales for March - Budgeted cost of goods sold for March
= $1,254,960 - $709,704
= $545,256

Therefore, the best choice is D) $411,940.

Answer the Following Question(s)using the Information Below