Required information Problem 13-53 & 13-54 (Static) (LO 13-4, 5, 6) [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 2 budget estimates: Sales revenues (37,500 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 $2,500,000 $ 400,000 545,000 216,000 267,000 285,000 67,800 270,300 25,200 $2,076,300 $ 423,700 All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $29,100 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $42,000. Sales volume and prices are expected to increase by 8 percent and 3 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 6 percent and variable manufacturing costs will decrease by 5 percent. Fixed cash manufacturing costs 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 information Problem 13-53 & 13-54 (Static) (LO 13-4, 5, 6) [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 2 budget estimates: Sales revenues (37,500 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 $2,500,000 $ 400,000 545,000 216,000 267,000 285,000 67,800 270,300 25,200 $2,076,300 $ 423,700 All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $29,100 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $42,000. Sales volume and prices are expected to increase by 8 percent and 3 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 6 percent and variable manufacturing costs will decrease by 5 percent. Fixed cash manufacturing costs 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Required information
Problem 13-53 & 13-54 (Static) (LO 13-4, 5, 6)
[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 2
budget estimates:
Sales revenues (37,500 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
$2,500,000
$ 400,000
545,000
216,000
267,000
285,000
67,800
270,300
25, 200
$2,076,300
$ 423,700
All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $29,100 will be
replaced in year 2 with new equipment that will incur an annual depreciation charge of $42,000. Sales volume and prices
are expected to increase by 8 percent and 3 percent, respectively. On a per-unit basis, expectations are that materials
costs will increase by 6 percent and variable manufacturing costs will decrease by 5 percent. Fixed cash manufacturing
costs 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.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F24de9d49-6070-4d88-ab58-a37c20172dbc%2F2a590d52-4c51-489f-bc97-85cb25c1a246%2Fm41274i_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
Problem 13-53 & 13-54 (Static) (LO 13-4, 5, 6)
[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 2
budget estimates:
Sales revenues (37,500 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
$2,500,000
$ 400,000
545,000
216,000
267,000
285,000
67,800
270,300
25, 200
$2,076,300
$ 423,700
All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $29,100 will be
replaced in year 2 with new equipment that will incur an annual depreciation charge of $42,000. Sales volume and prices
are expected to increase by 8 percent and 3 percent, respectively. On a per-unit basis, expectations are that materials
costs will increase by 6 percent and variable manufacturing costs will decrease by 5 percent. Fixed cash manufacturing
costs 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.
Transcribed Image Text:Problem 13-54 (Static) Estimate Cash from Operations (LO 13-5)
Required:
Estimate the cash from operations expected in year 2.
GULF STATES MANUFACTURING
Cash Basis Budgeted Income Statement
For Year 2
Manufacturing costs:
Total manufacturing costs
Marketing and administrative costs:
Total cash marketing and administrative costs
Total cash costs
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