Required:Estimate the cash from operations expected in year 2.GULF STATES MANUFACTURINGCash Basis Budgeted Income StatementFor Year 2Manufacturing costs:Total manufacturing costsMarketing and administrative costs:Total cash marketing and administrative costsTotal cash costs Required information(The following information applies to the questions displayed below.)Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2budget estimates:Sales revenues (37,500 units)Manufacturing costsMaterialsVariable cash costsFixed cash costsDepreciation (fixed)Marketing and administrative costsMarketing (variable, cash)Marketing depreciationAdministrative (fixed, cash)Administrative depreciationTotal costs$2,500,000$ 400,000545,000216,000267,000285,00067,800270,30025,200$2,076,300$ 423, 700Operating profitsAll depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $29,100 will bereplaced in year 2 with new equipment that will incur an annual depreciation charge of $42,000. Sales volume and pricesare expected to increase by 8 percent and 3 percent, respectively. On a per-unit basis, expectations are that materialscosts will increase by 6 percent and variable manufacturing costs will decrease by 5 percent. Fixed cash manufacturingcosts are expected to decrease by 9 percent.Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 10 percent.Inventories are kept at zero. Gulf States operates on a cash basis.Required:Estimate the cash from operations expected in year 2.

Sales revenue 37,500 * 1.08 * 66.67(approx.) * 1.03 2,781,000 Manufacturing costs: Material…

Answered: Estimate the cash from operations…

Business

Accounting

Estimate the cash from operations expected in year 2.

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter28: Statistics And Linear Regression (stats)

Section: Chapter Questions

Problem 1R

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