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16 December, 10:36

A company has the following budget information: Sales: $118,800; COGS: $48,500; Depreciation expense: $1,500; Interest expense: $250; Other expenses: $41,880. If the company budgets 40% for income tax expense, the amount of budgeted income tax expense will be

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  1. 16 December, 12:09
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    Answer: Amount of budgeted income tax expense = $10,668

    Explanation:

    Given:

    Sales = $118,800

    COGS = $48,500

    Depreciation expense = $1,500

    Interest expense = $250

    Other expenses = $41,880

    We'll compute the amount of budgeted income tax expense using the following formula:

    Amount of budgeted income tax expense = 40% of (Sales - COGS - Depreciation expense - Interest expense - Other expenses)

    = $118,800 - $48,500 - $1,500 - $250 - $41,880

    = 40% x $26,670

    = $10,668
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