The following information is available for RCA Industries from year 1 operations:Sales revenue (65,000 units)Manufacturing costsMaterialsVariable cash costsFixed cash costsDepreciation (fixed)Marketing and administrative costsMarketing (variable, cash)Marketing depreciationAdministrative (fixed, cash)Administrative depreciationTotal costsOperating profits (losses)$1,735,000$ 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.

Budgeted income statement is a financial statement that helps estimate and evaluate a business's…

Answered: All depreciation charges are fixed.…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 14.16E

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The following information is available for Fairmount Industries from year 1 operations: Sales revenue (58,000 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) $ 1,685,000 $ 253,000 558,000 340,000 173,000 184,000 54,000 175,000 21,500 $ 1,758,500 $ (73,500) All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $35,000 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…
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 (55,000 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 cost Operating profits (losses) $ 1,670,000 $ 250,000 555,000 337,000 170,000 181,000 51,000 172,000 20,000 $ 1,735,000 $ (66,000) All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $32,000 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…
The following information is available for Fairmount Industries from year 1 operations: Sales revenue (64,000 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) $ 1,730,000 $ 259,000 564,000 346,000 179,000 190,000 60,000 181,000 24,500 $ 1,803,500 $ (73,500) All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $41,000 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…
The following information is available for ABC Industries from year 1 operations: Sales revenue (65,000 units) $ 1,735,000 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) All depreciation charges are fixed. 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…
Coyle Manufacturing reports the following information for year 1: Sales revenue (64,000 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 $ 5,190,000 $ 306,000 256,000 594,000 1,804,000 800,000 273,000 920,000 138,000 Operating profits (losses) $ 5,091,000 $ 99,000 All depreciation charges are fixed. Manufacturing depreciation is expected to increase by 10 percent in year 2. Marketing and administrative depreciation are expected to remain the same for year 2. Sales volume is expected to increase by 5 percent, but prices are expected to fall by 10 percent. Materials costs per unit are expected to decrease by 8 percent. Unit variable cash manufacturing costs are expected to increase by 15 percent. Fixed cash costs are expected to increase by 6 percent. Variable marketing costs will change…
The following data are taken from the records of Dove Company, a division of Oasis Corporation for the year ended December 31, 2021 Sales 120,000,000.00Less: Variable Cost and Expenses 8,000,000.00Contribution Margin 4,000,000.00Less:: Direct Fixed Cost and Expenses 1,000,000.00Segment Income 3,000,000.00 The company used an average assets of P8,000,000.00 in 2021. The cost of capital is 12% Calculate the following:1. Return on Sales2. Asset Turnover3. ROI4. Residual Income
Coyle Manufacturing reports the following information for year 1: Sales revenue (60,000 units) $ 5,130,000 Manufacturing costs Materials $ 302,000 256,000 Variable cash costs Fixed cash costs. Depreciation (fixed) 590,000 1,800,000 Marketing and administrative costs Marketing (variable, cash) Marketing depreciation Administrative (fixed, cash) Administrative depreciation Total costs Operating profits (losses) 760,000 269,000 916,000 134,000 $ 5,027,000 $ 103,000 All depreciation charges are fixed. Manufacturing depreciation is expected to increase by 10 percent in year 2. Marketing and administrative depreciation are expected to remain the same for year 2. Sales volume is expected to increase by 5 percent, but prices are expected to fall by 10 percent. Materials costs per unit are expected to decrease by 8 percent. Unit variable cash manufacturing costs are expected to increase by 15 percent. Fixed cash costs are expected to increase by 6 percent. Variable marketing costs will change…
The following information is available for year 1 for Pepper Products: Sales revenue (120,000 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 $2,760,000 $164,000 140,000 323,000 985,000 All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to fall by 8 percent, but prices are expected to rise by 14 percent. Material costs per unit are expected to increase by 15 percent. Other unit variable manufacturing costs are expected to decrease by 8 percent per unit. Fixed cash costs are expected to increase by 7 percent. PEPPER PRODUCTS Budgeted Income Statement For Year 2 Manufacturing costs: 416,000 147,000 500,000 74,000 $2,749,000 11,000 Variable mar costs will change with unit volume. Administrative cash costs are…
(J) Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division ADivision BDivision CSales$ 12,120,000$ 28,120,000$ 20,120,000Average operating assets$ 3,030,000$ 7,030,000$ 5,030,000Net operating income$ 496,920$ 449,920$ 503,000Minimum required rate of return7.00%7.50%10.00%Required: 1. Compute the margin, turnover, and return on investment (ROI) for each division. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 8% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity
Zachary Transport Company divides its operations into four divisions. A recent income statement for its West Division follows. ZACHARY TRANSPORT COMPANY West Division Income Statement for Year 3 Revenue $ 690,000 (540,000) (69,000) (89,000) (59,000) (149,000) Salaries for drivers Fuel expenses Insurance Division-level facility-sustaining costs Companywide facility-sustaining costs Net loss $(216,000) Required a. By how much would companywide income increase or decrease if West Division is eliminated? Should West Division be eliminated? b. Assume that West Division is able to increase its revenue to $780,000 by raising its prices. Determine the amount of the increase or decrease that would occur in companywide net income if the segment were eliminated. Should West Division be eliminated if revenue were $780,000? c. What is the minimurn amount of revenue required to justify continuing the operation of West Division? Complete this question by entering your answers in the tabs below.…
6. .Using the algebraic method, department B's cost allocated to department C is: а. Р 7,794 b. P13,192 c. P14,021 d. P29,021
Coyle Manufacturing reports the following information for year 1: Sales revenue (69,000 units) $ 5,265,000 Manufacturing costs Materials $ 311,000 Variable cash costs 256,000 Fixed cash costs 599,000 Depreciation (fixed) 1,809,000 Marketing and administrative costs Marketing (variable, cash) 850,000 Marketing depreciation 278,000 Administrative (fixed, cash) 925,000 Administrative depreciation 143,000 Total costs $ 5,171,000 Operating profits (losses) $ 94,000 All depreciation charges are fixed. Manufacturing depreciation is expected to increase by 10 percent in year 2. Marketing and administrative depreciation are expected to remain the same for year 2. Sales volume is expected to increase by 5 percent, but prices are expected to fall by 10 percent. Materials costs per unit are expected to decrease by 8 percent. Unit variable cash manufacturing costs are expected to increase by 15 percent. Fixed cash costs are expected to increase by 6 percent.…

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