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 2 budget estimates: Sales revenues: (22,500 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 $2,025,000 $361,000 493,000 198,000 244,000 256,000 62,000 248,000 $ 22,000 $1,884,000 $ 141,000 All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $15,550 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $22,000. 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. equired: stimate the cash from operations expected in year 2. (Do not round intermediate calculations. Round your final answers to the
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 2 budget estimates: Sales revenues: (22,500 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 $2,025,000 $361,000 493,000 198,000 244,000 256,000 62,000 248,000 $ 22,000 $1,884,000 $ 141,000 All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $15,550 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $22,000. 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. equired: stimate the cash from operations expected in year 2. (Do not round intermediate calculations. Round your final answers to the
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![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 2
budget estimates:
Sales revenues: (22,500 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
$2,025,000
$361,000
493,000
198,000
244,000
256,000
62,000
248,000
$ 22,000
$1,884,000
$ 141,000
All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $15,550 will be
replaced in year 2 with new equipment that will incur an annual depreciation charge of $22,000. 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:
Estimate the cash from operations expected in year 2. (Do not round intermediate calculations. Round your final answers to the
nearest whole dollar amounts.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd0eb9809-da38-499f-be14-e45bbb5daf87%2F1cbfb511-e3f6-44a0-bcca-f0b0aa105f0b%2Fi1xabc_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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 2
budget estimates:
Sales revenues: (22,500 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
$2,025,000
$361,000
493,000
198,000
244,000
256,000
62,000
248,000
$ 22,000
$1,884,000
$ 141,000
All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $15,550 will be
replaced in year 2 with new equipment that will incur an annual depreciation charge of $22,000. 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:
Estimate the cash from operations expected in year 2. (Do not round intermediate calculations. Round your final answers to the
nearest whole dollar amounts.)
Transcribed Image Text:Required:
Estimate the cash from operations expected in year 2. (Do not rous
nearest whole dollar amounts.)
GULF STATES MANUFACTURING
Cash Basis Budgeted Income Statement
For Year 2
Sales revenue
Manufacturing costs:
Variable cash costs
Fixed cash costs
Depreciation
Total manufacturing costs
Marketing and administrative costs:
Marketing (variable, cash)
Administrative (fixed, cash)
Depreciation
Total cash marketing and administrative costs
Total cash costs
$
$
$
0
0
0
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