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

 

Sales revenues (18,000 units)$1,620,000

Manufacturing costs 

Materials$289,000

Variable cash costs 395,000

Fixed cash costs 159,000

Depreciation (fixed) 195,000

Marketing and administrative costs 

Marketing (variable, cash) 208,000

Marketing depreciation 51,000

Administrative (fixed, cash) 204,000

Administrative depreciation$18,000

Total costs$1,519,000

Operating profits$101,000

All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $16,150 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $22,600. Sales volume and prices are expected to increase by 10 percent and 6 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 8 percent and variable manufacturing costs will decrease by 2 percent. Fixed cash manufacturing costs are expected to decrease by 6 percent.

Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 6 percent. Inventories are kept at zero. Gulf States operates on a cash basis.

References

 

Required: Prepare a budgeted income statement for year 2. (Do not round intermediate calculations.) GULF STATES MANUFACTURING Budgeted Income Statement For Year 2 Sales revenue Manufacturing costs: Materials 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 O $ 1.888.920 S343,427 425,810 149,460 201,450 $ 1,120,147 s 228,800 51,000 216,240 18,000 $ 514,040 $ 1,634,187 254,733