Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2 budget estimates:

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
Manufacturing costs
Materials $ 353,000
Variable cash costs 483,000
Fixed cash costs 195,000
Depreciation (fixed) 239,000
Marketing and administrative costs
Marketing (variable, cash) 256,000
Marketing depreciation 63,000
Administrative (fixed, cash) 252,000
Administrative depreciation $ 22,000
Total costs $ 1,863,000
Operating profits $ 117,000

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.

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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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Required:

Prepare a budgeted income statement for year 2. (Do not round intermediate calculations.)

Required:

Estimate the cash from operations expected in year 2.( Cash basis budgeted income statement)

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