TNR 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 profit. Return on sales (net profit / sales) is anticipated to be 50%. 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 profit is 50% of sales, so $9,000. Operating costs plus cost of goods sold equals 40% of net profit, so $3,600. Let operating costs be x, then cost of goods sold is 2x. x + 2x = $3,600, so x = $1,200.

TNR Is Preparing Its Budgeted Income Statement for the Month