All depreciation charges are fixed. Sales volume is expected to decrease by 2 percent. Sales pri is expected to increase by 8 percent. On a per-unit basis, expectations are that materials costs wi 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: Prepare a budgeted income statement for year 2. Round your numbers to the nearest integers.
All depreciation charges are fixed. Sales volume is expected to decrease by 2 percent. Sales pri is expected to increase by 8 percent. On a per-unit basis, expectations are that materials costs wi 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: Prepare a budgeted income statement for year 2. Round your numbers to the nearest integers.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:The following information is available for RCA Industries from year 1 operations:
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)
Administrative depreciation
Total costs
Operating profits (losses)
$1,735,000
$ 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 Industries operates on a cash
basis. No change is expected in marketing or administrative depreciation.
Required: Prepare a budgeted income statement for year 2. Round your numbers to the nearest
integers.
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