Cycle-1 is a fast-growing start-up firm that manufactures bicycles. The following income statement is available for October: Sales revenue (300 units @ $600 per unit) $ 180,000 Less Manufacturing costs Variable costs 26,000 Depreciation (fixed) 27,540 Marketing and administrative costs Fixed costs (cash) 67,500 Depreciation (fixed) 22,860 Total costs $ 143,900 Operating profits $ 36,100 Sales volume is expected to increase by 20 percent in November, but the sales price is expected to fall 10 percent. Variable manufacturing costs are expected to increase by 4 percent per unit in November. In addition to these cost changes, variable manufacturing costs also will change with sales volume. Marketing and administrative cash costs are expected to increase by 8 percent. Cycle-1 operates on a cash basis and maintains no inventories. Depreciation is fixed and should remain unchanged over the next three years. Required: Prepare a budgeted income statement for November. (Do not round intermediate calculations.)
Cycle-1 is a fast-growing start-up firm that manufactures bicycles. The following income statement is available for October: Sales revenue (300 units @ $600 per unit) $ 180,000 Less Manufacturing costs Variable costs 26,000 Depreciation (fixed) 27,540 Marketing and administrative costs Fixed costs (cash) 67,500 Depreciation (fixed) 22,860 Total costs $ 143,900 Operating profits $ 36,100 Sales volume is expected to increase by 20 percent in November, but the sales price is expected to fall 10 percent. Variable manufacturing costs are expected to increase by 4 percent per unit in November. In addition to these cost changes, variable manufacturing costs also will change with sales volume. Marketing and administrative cash costs are expected to increase by 8 percent. Cycle-1 operates on a cash basis and maintains no inventories. Depreciation is fixed and should remain unchanged over the next three years. Required: Prepare a budgeted income statement for November. (Do not round intermediate calculations.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Cycle-1 is a fast-growing start-up firm that manufactures bicycles. The following income statement is available for October:
| Sales revenue (300 units @ $600 per unit) | $ | 180,000 |
| Less | ||
| Variable costs | 26,000 | |
| 27,540 | ||
| Marketing and administrative costs | ||
| Fixed costs (cash) | 67,500 | |
| Depreciation (fixed) | 22,860 | |
| Total costs | $ | 143,900 |
| Operating profits | $ | 36,100 |
Sales volume is expected to increase by 20 percent in November, but the sales price is expected to fall 10 percent. Variable manufacturing costs are expected to increase by 4 percent per unit in November. In addition to these cost changes, variable manufacturing costs also will change with sales volume. Marketing and administrative cash costs are expected to increase by 8 percent.
Cycle-1 operates on a cash basis and maintains no inventories. Depreciation is fixed and should remain unchanged over the next three years.
Required:
Prepare a
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