Required: Prepare a budgeted income statement for year 2. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Required:
Prepare a budgeted income statement for
year 2. (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. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.)
The following information is available for year 1 for Pepper Products:
Sales revenue (290,000 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
$8,410,000
$ 496,000
421,000
970,000
2,958,000
1,250,000
444,000
1,510,000
221,000
$8,270,000
$ 140,000
All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to fall by 3 percent, but
prices are expected to rise by 11 percent. Material costs per unit are expected to increase by 10 percent. Other unit variable
manufacturing costs are expected to decrease by 5 percent per unit. Fixed cash costs are expected to increase by 6 percent.
Variable marketing costs will change with unit volume. Administrative cash costs are expected to increase by 3 percent. Inventories
are kept at zero. Pepper Products operates on a cash basis.
Transcribed Image Text:The following information is available for year 1 for Pepper Products: Sales revenue (290,000 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 $8,410,000 $ 496,000 421,000 970,000 2,958,000 1,250,000 444,000 1,510,000 221,000 $8,270,000 $ 140,000 All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to fall by 3 percent, but prices are expected to rise by 11 percent. Material costs per unit are expected to increase by 10 percent. Other unit variable manufacturing costs are expected to decrease by 5 percent per unit. Fixed cash costs are expected to increase by 6 percent. Variable marketing costs will change with unit volume. Administrative cash costs are expected to increase by 3 percent. Inventories are kept at zero. Pepper Products operates on a cash basis.
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