ACCOUNTING
Multiple Choice
Katie Enterprises reports the year-end information from 20x4 as follows:
Sales (70,000 units) $560,000
Cost of goods sold 210,000
Gross margin 350,000
Operating expenses 200,000
Operating income $ 150,000
Katie is developing the 20x5 budget. In 20x5 the company would like to increase selling prices by 4%, and as a result expects a decrease in sales volume of 10%. All other operating expenses are expected to remain constant. Assume that COGS is a variable cost and that operating expenses are a fixed cost.
What is budgeted cost of goods sold for 20x5?
a. $189,000
b. $196,560
c. $218,400
d. $210,000
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