Required information [The following information applies to the questions displayed below.] The following information is available for Fairmount Industries from year 1 operations: Sales revenue (61,000 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 (losses) $1,215,000 $256,000 561,000 343,000 176,000 167,000 57,000 178,000 23,000 $1,781,000 $ (66,000) All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $38,000 will be fully depreciated by the end of year 1 and will not be replaced with new equipment because it is still operating to specification Sales volume is expected to decrease by 2 percent Sales price is expected to increase by 8 percent. On a per-unit basis, expectations are that materials costs will decrease by 5 percent and variable manufacturing cash costs will increase by 4 percent. Fixed cash manufacturing costs are expected to increase by 12 percent. Variable marketing costs will change with volume. Administrative cash costs are expected to decrease by 15 percent Inventories are kept at zero. Fairmount Industries operates on a cash basis. No change is expected in marketing or administrative depreciation.
Required information [The following information applies to the questions displayed below.] The following information is available for Fairmount Industries from year 1 operations: Sales revenue (61,000 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 (losses) $1,215,000 $256,000 561,000 343,000 176,000 167,000 57,000 178,000 23,000 $1,781,000 $ (66,000) All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $38,000 will be fully depreciated by the end of year 1 and will not be replaced with new equipment because it is still operating to specification Sales volume is expected to decrease by 2 percent Sales price is expected to increase by 8 percent. On a per-unit basis, expectations are that materials costs will decrease by 5 percent and variable manufacturing cash costs will increase by 4 percent. Fixed cash manufacturing costs are expected to increase by 12 percent. Variable marketing costs will change with volume. Administrative cash costs are expected to decrease by 15 percent Inventories are kept at zero. Fairmount Industries operates on a cash basis. No change is expected in marketing or administrative depreciation.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Please Do not give image format
![Required information
[The following information applies to the questions displayed below.]
The following information is available for Fairmount Industries from year 1 operations:
Sales revenue (61,000 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 (losses).
$1,215,000
$ 256,000
561,000
343,000
176,000
167,000
57,000
All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $38,000 will be
fully depreciated by the end of year 1 and will not be replaced with new equipment because it is still operating to
specification Sales volume is expected to decrease by 2 percent Sales price is expected to increase by 8 percent. On a
per-unit basis, expectations are that materials costs will decrease by 5 percent and variable manufacturing cash costs will
increase by 4 percent. Fixed cash manufacturing costs are expected to increase by 12 percent.
Fairmount Industries
Budgeted Income Statement
For Year 2
178,000
23,000
$1,781,000
$ (66,000)
Variable marketing costs will change with volume. Administrative cash costs are expected to decrease by 15 percent.
Inventories are kept at zero. Fairmount Industries operates on a cash basis. No change is expected in marketing or
administrative depreciation.
Manufacturing costs
Required:
Prepare a budgeted income statement for year 2.
Note: 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%2Fd3c134ff-b7ac-4f59-841d-6bdd50fc3944%2F5f46d16d-4a01-4ced-874b-35c8a72afe84%2F9hn8fbs_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
[The following information applies to the questions displayed below.]
The following information is available for Fairmount Industries from year 1 operations:
Sales revenue (61,000 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 (losses).
$1,215,000
$ 256,000
561,000
343,000
176,000
167,000
57,000
All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $38,000 will be
fully depreciated by the end of year 1 and will not be replaced with new equipment because it is still operating to
specification Sales volume is expected to decrease by 2 percent Sales price is expected to increase by 8 percent. On a
per-unit basis, expectations are that materials costs will decrease by 5 percent and variable manufacturing cash costs will
increase by 4 percent. Fixed cash manufacturing costs are expected to increase by 12 percent.
Fairmount Industries
Budgeted Income Statement
For Year 2
178,000
23,000
$1,781,000
$ (66,000)
Variable marketing costs will change with volume. Administrative cash costs are expected to decrease by 15 percent.
Inventories are kept at zero. Fairmount Industries operates on a cash basis. No change is expected in marketing or
administrative depreciation.
Manufacturing costs
Required:
Prepare a budgeted income statement for year 2.
Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.
Transcribed Image Text:Required:
Prepare a budgeted income statement for year 2
Note: Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.
Fairmount Industries
Budgeted Income Statement
For Year 2
Manufacturing costs:
Total manufacturing costs
Marketing and administrative costs:
Total marketing and administrative costs
Total costs
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