ACCOUNTING
13-36 (Prepare Budgeted Financial Statements) The following information is available for year 1 for Dancer Components:
Revenues (300,000 units). . . . . . . . . . $5,700,000
Manufacturing costs
Materials . . . . . . . . . . . . . . . . . . . . . $ 336,000
Variable cash costs . . . . . . . . . . . . . 284,800
Fixed cash costs . . . . . . . . . . . . . . . 655,200
Depreciation (fixed) . . . . . . . . . . . . . 1,998,000
Marketing and administrative costs
Marketing (variable, cash) . . . . . . . . 844,800
Marketing depreciation . . . . . . . . . . 299,200
Administrative (fixed, cash) . . . . . . . 1,018,400
Administrative depreciation . . . . . . . 149,600
Total costs . . . . . . . . . . . . . . . . . . $5,586,000
Operating profits . . . . . . . . . . . . . . . . . $ 114,000
All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to increase by 18 percent, but prices are expected to fall by 5 percent. Material costs per unit are expected to decrease by 8 percent. Other unit variable manufacturing costs are expected to decrease by 2 percent per unit. Fixed manufacturing costs are expected to increase by 5 percent.
Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 10 percent. Inventories are kept at zero. Dancer operates on a cash basis.
Required
Prepare a budgeted income statement for year 2.
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