Question

Smarton Company is in the process of preparing its budgeted income statement. It has determined its estimated gross margin to be $90,000. The company also expects to incur selling and administrative expenses of $30,000 and interest expense of $12,000. What would be Smarton's budgeted net income? A) $48,000 B) $60,000 C) $30,000 D) $18,000

Answer 1

A) $48,000

Step-by-step explanation:

`$$$Gross Margin$$$- S&A expenses$$$Equals to Operative Income`

Then:

`$$$Operative Income $$$- Interest Expense$$$Net Income`

Assuming there is no tax rate

`90,000 - 30,000 - 12,000 = 48,000`

48,000 would be the net income