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Budgeted income statement. Easecom Company is a manufacturer of videoconferencing products. Regular units are manufactured to meet marketing projections, and specialized units are made after an order is received. maintaining the videoconferencing equipment is an important area of customer satisfaction. With the recent down turn in the computer industry, the videoconferencing equipment segment has suffered, leading to a decline in Easecom's financial performance. The following income statement shows results for 2011:
Operating income $550 Easecom's management team is in the process of preparing the 2012 budget and is studying the following information: 1. Selling prices of equipment are expected to increase by 10% as the economic recovery begins. The selling price of each maintenance contract is expected to remain unchanged from 2011. 2. Equipment sales in units are expected to increase by 6%, with a corresponding 6% growth in units of maintenance contracts. 3. Cost of each unit sold is expected to increase by 3% to pay for the necessary technology and quality improvements. 4. Marketing costs are expected to increase by $250,000, but administration costs are expected to remain at 2011 levels. 5. Distribution costs vary in proportion to the number of units of equipment sold. 6. Two maintenance technicians are to be hired at a total cost of $130,000, which covers wages and related travel costs. The objective is to improve customer service and shorten response time. 7. There is no beginning or ending inventory of equipment. Prepare a budgeted income statement for the year ending December 31, 2012
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