MasterTech is a new software company that develops and markets productivity software for municipal government applications. In developing their income statement, the following formulas are used:
Gross profit = Net sales - Cost of sales
Net operating profit = Gross profit - Administrative expenses - selling expenses
Net income before taxes = Net operating profit - interest expense
Net income - Net income before taxes - taxes
*Net sales are expected to be $900,000. Cost of Sales is estimated to be $540,000. Selling expenses has a fixed component that is estimated to be $90,000, and a variable component that is estimated to be 7% of net sales. Administrative expenses are $50,000. Interest expenses are $10,000. The company is taxed at 50% rate. Develop a spreadsheet model to calculate the net income. Design your spreadsheet using good spreadsheet engineering principles.