Question
Cameron Parts has the following data from year 1 operations, which are to be used for developing year 2 budget estimates: Sales revenues (12,500 units)
Cameron Parts has the following data from year 1 operations, which are to be used for developing year 2 budget estimates: |
Sales revenues (12,500 units) | $ | 1,119,000 |
Manufacturing costs | ||
Materials | $ | 199,500 |
Variable cash costs | 271,350 | |
Fixed cash costs | 108,000 | |
Depreciation | 133,500 | |
Marketing and administrative costs | ||
Marketing (variable, cash) | 142,500 | |
Marketing depreciation | 33,900 | |
Administrative (fixed, cash) | 135,165 | |
Administrative depreciation | $ | 12,600 |
Total costs | $ | 1,036,515 |
Operating profits | $ | 82,485 |
All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $14,550 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $21,000. Sales volume and prices are expected to increase by 12 percent and 6 percent, respectively. On a per unit basis, expectations are that materials costs will increase by 10 percent and variable manufacturing costs will decrease by 4 percent. Fixed manufacturing costs are expected to decrease by 7 percent. |
Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 8 percent. Inventories are kept at zero. Cameron operates on a cash basis. |
Required: |
Estimate the cash from operations expected in year 2. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) GL Codes: Sales Revenue, administrative, depreciation, fixed cash costs, fixed service costs, marketing (variable, cash), Materials, Variable cash costs.
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