Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2 budget estimates:
|Sales revenues (22,000 units)||$||1,980,000|
|Variable cash costs||483,000|
|Fixed cash costs||195,000|
|Marketing and administrative costs|
|Marketing (variable, cash)||256,000|
|Administrative (fixed, cash)||252,000|
All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $16,550 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $23,000. Sales volume and prices are expected to increase by 13 percent and 7 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 11 percent and variable manufacturing costs will decrease by 3 percent. Fixed cash manufacturing costs are expected to decrease by 8 percent.
Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 9 percent. Inventories are kept at zero. Gulf States operates on a cash basis.
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Prepare a budgeted income statement for year 2. (Do not round intermediate calculations.)
Estimate the cash from operations expected in year 2.( Cash basis budgeted income statement)