Fortune, Inc., is preparing its master budget for the first quarter. The company sells a single product at a price of S25 per unit. Sales (in units) are forecasted at 45,000 for January, 55,000 for February, and 50,000 for March. Cost of goods sold is S14 per unit. Other expense information for the first quarter follows. Prepare a budgeted income statement for this first quarter.

If jobs have been undercosted due to underallocation of manufacturing overhead, then cost of goods sold (cogs) is too low and which of the following corrections must be made? a. decrease cogs for double the amount of the underallocation b. increase cogs for double the amount of the underallocation c. decrease cogs for the amount of the underallocation d. increase cogs for the amount of the underallocation