Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2 budget estimates: Sales revenues (15,500 units) Manufacturing costs Materials Variable cash costs Fixed cash costs Depreciation (fixed) Marketing and administrative costs Marketing (variable, cash). Marketing depreciation Administrative (fixed, cash) Administrative depreciation Total costs Operating profits $1,395,000 $ 249,000 339,000 135,000 167,000 172,000 41,000 164,000 15,000 $1,282,000 $ 113,000 All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $14,850 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $21,300. Sales volume and prices are expected to increase by 9 percent and 5 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 7 percent and variable manufacturing costs will decrease by 2 percent. Fixed cash manufacturing costs are expected to decrease by 5 percent. Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 5 percent. Inventories are kept at zero. Gulf States operates on a cash basis. Required: Prepare a budgeted income statement for year 2. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.)
Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2 budget estimates: Sales revenues (15,500 units) Manufacturing costs Materials Variable cash costs Fixed cash costs Depreciation (fixed) Marketing and administrative costs Marketing (variable, cash). Marketing depreciation Administrative (fixed, cash) Administrative depreciation Total costs Operating profits $1,395,000 $ 249,000 339,000 135,000 167,000 172,000 41,000 164,000 15,000 $1,282,000 $ 113,000 All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $14,850 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $21,300. Sales volume and prices are expected to increase by 9 percent and 5 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 7 percent and variable manufacturing costs will decrease by 2 percent. Fixed cash manufacturing costs are expected to decrease by 5 percent. Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 5 percent. Inventories are kept at zero. Gulf States operates on a cash basis. Required: Prepare a budgeted income statement for year 2. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please explain proper steps by Step and Do Not Give Solution In Image Format ? And Fast Answering Please ?
Transcribed Image Text:GULF STATES MANUFACTURING
Budgeted Income Statement
For Year 2
Sales revenue
Manufacturing costs:
Variable cash costs
Fixed cash costs
Depreciation (fixed)
Total manufacturing costs
Marketing and administrative costs:
Marketing (variable, cash)
Marketing depreciation
Administrative (fixed, cash)
Administrative depreciation
Total marketing and administrative costs
Total costs
Operating profit
▶
Amm
$
$
$
0
0
0
Transcribed Image Text:Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2
budget estimates:
Sales revenues (15,500 units)
Manufacturing costs
Materials
Variable cash costs
Fixed cash costs
Depreciation (fixed)
Marketing and administrative costs
Marketing (variable, cash)
Marketing depreciation
Administrative (fixed, cash)
Administrative depreciation
Total costs
Operating profits
$1,395,000
$ 249,000
339,000
135,000
167,000
$
172,000
41,000
164,000
15,000
$1,282,000
$113,000
All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $14,850 will be
replaced in year 2 with new equipment that will incur an annual depreciation charge of $21,300. Sales volume and prices
are expected to increase by 9 percent and 5 percent, respectively. On a per-unit basis, expectations are that materials
costs will increase by 7 percent and variable manufacturing costs will decrease by 2 percent. Fixed cash manufacturing
costs are expected to decrease by 5 percent.
Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 5 percent.
Inventories are kept at zero. Gulf States operates on a cash basis.
Required:
Prepare a budgeted income statement for year 2. (Do not round intermediate calculations. Round your final answers to the nearest
whole dollar amounts.)
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