The following information is available for ABC Industries from year 1 operations:Sales revenue (65,000 units)$ 1,735,000Manufacturing costsMaterialsVariable cash costsFixed cash costsDepreciation (fixed)Marketing and administrative costsMarketing (variable, cash)Marketing depreciationAdministrative (fixed, cash) 4Administrative depreciation.Total costsOperating profits (losses)$ 260,000565,000347,000180,000191,00061,000182,00025,000$ 1,811,000$ (76,000)All depreciation charges are fixed. Sales volume is expected to decrease by 2 percent. Sales priceis expected to increase by 8 percent. On a per-unit basis, expectations are that materials costs willdecrease by 5 percent and variable manufacturing cash costs will increase by 4 percent. Fixedcash manufacturing costs are expected to increase by 12 percent.Variable marketing costs will change with volume. Administrative cash costs are expected todecrease by 15 percent. Inventories are kept at zero. Fairmount Industries operates on a cashbasis. No change is expected in marketing or administrative depreciation.Required: Prepare a budgeted income statement for year 2. Round your numbers to the nearestintegers.

Lets understand the basics.Management prepares budget in order to estimate future profit and loss…

The following information is available for ABC Industries from year I operations: 1 $ 1,735,000 Sales revenue (65,000 units) Manufacturing costs Materials Variable cash costs Fixed cash costs Depreciation (fixed) Marketing and administrative costs Marketing (variable, cash) Marketing depreciation Administrative (fixed, cash) 4 Administrative depreciation Total costs Operating profits (losses) $ 260,000 565,000 347,000 180,000 191,000 61,000 182,000 25,000 $1,811,000 $ (76,000)

The following information is available for ABC Industries from year I operations: 1 $ 1,735,000 Sales revenue (65,000 units) Manufacturing costs Materials Variable cash costs Fixed cash costs Depreciation (fixed) Marketing and administrative costs Marketing (variable, cash) Marketing depreciation Administrative (fixed, cash) 4 Administrative depreciation Total costs Operating profits (losses) $ 260,000 565,000 347,000 180,000 191,000 61,000 182,000 25,000 $1,811,000 $ (76,000)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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