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Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2 budget estimates: Sales revenues (15,500 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 $1,395,000 $ 249,000 339,000 135,000 167,000 172,000 41,000 164,000 15,000 $1,282,000 $ 113,000 All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $14,850 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $21,300. Sales volume and prices are expected to increase by 9 percent and 5 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 7 percent and variable manufacturing costs will decrease by 2 percent. Fixed cash manufacturing costs are expected to decrease by 5 percent. Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 5 percent. Inventories are kept at zero. Gulf States operates on a cash basis. Required: Prepare a budgeted income statement for year 2. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.)

Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2 budget estimates: Sales revenues (15,500 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 $1,395,000 $ 249,000 339,000 135,000 167,000 172,000 41,000 164,000 15,000 $1,282,000 $ 113,000 All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $14,850 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $21,300. Sales volume and prices are expected to increase by 9 percent and 5 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 7 percent and variable manufacturing costs will decrease by 2 percent. Fixed cash manufacturing costs are expected to decrease by 5 percent. Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 5 percent. Inventories are kept at zero. Gulf States operates on a cash basis. 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
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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GULF STATES MANUFACTURING Budgeted Income Statement For Year 2 Sales revenue Manufacturing costs: Variable cash costs Fixed cash costs Depreciation (fixed) Total manufacturing costs Marketing and administrative costs: Marketing (variable, cash) Marketing depreciation Administrative (fixed, cash) Administrative depreciation Total marketing and administrative costs Total costs Operating profit ▶ Amm $ $ $ 0 0 0
Transcribed Image Text:GULF STATES MANUFACTURING Budgeted Income Statement For Year 2 Sales revenue Manufacturing costs: Variable cash costs Fixed cash costs Depreciation (fixed) Total manufacturing costs Marketing and administrative costs: Marketing (variable, cash) Marketing depreciation Administrative (fixed, cash) Administrative depreciation Total marketing and administrative costs Total costs Operating profit ▶ Amm $ $ $ 0 0 0
Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2 budget estimates: Sales revenues (15,500 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 $1,395,000 $ 249,000 339,000 135,000 167,000 $ 172,000 41,000 164,000 15,000 $1,282,000 $113,000 All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $14,850 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $21,300. Sales volume and prices are expected to increase by 9 percent and 5 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 7 percent and variable manufacturing costs will decrease by 2 percent. Fixed cash manufacturing costs are expected to decrease by 5 percent. Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 5 percent. Inventories are kept at zero. Gulf States operates on a cash basis. 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:Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2 budget estimates: Sales revenues (15,500 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 $1,395,000 $ 249,000 339,000 135,000 167,000 $ 172,000 41,000 164,000 15,000 $1,282,000 $113,000 All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $14,850 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $21,300. Sales volume and prices are expected to increase by 9 percent and 5 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 7 percent and variable manufacturing costs will decrease by 2 percent. Fixed cash manufacturing costs are expected to decrease by 5 percent. Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 5 percent. Inventories are kept at zero. Gulf States operates on a cash basis. Required: Prepare a budgeted income statement for year 2. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.)
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