Question
Dalley Inc. has the following information for its first year of operations: Revenues (200,000 units) $ 2,900,000 Manufacturing costs: Materials $ 168,000 Variable cash costs
Dalley Inc. has the following information for its first year of operations:
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|
|
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Revenues (200,000 units) | $ | 2,900,000 |
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Manufacturing costs: |
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|
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Materials | $ | 168,000 |
|
Variable cash costs |
| 142,400 |
|
Fixed cash costs |
| 327,600 |
|
Depreciation (fixed) |
| 999,000 |
|
|
|
| |
Marketing (variable) |
| 422,400 |
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Marketing depreciation |
| 149,600 |
|
Administrative (fixed) |
| 509,200 |
|
Administrative depreciation |
| 74,800 |
|
Total costs | $ | 2,793,000 |
|
Operating profits | $ | 107,000 |
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All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to increase by 15%, but sales prices are expected to fall by 5%. Material costs per unit are expected to decrease by 6%. Other unit variable manufacturing costs are expected to decrease by 2% per unit. Fixed manufacturing costs (other than depreciation) are expected to increase by 5%.
Variable marketing costs per unit will remain constant. Administrative costs (other than depreciation) are expected to increase by 10%.
Assume there are no inventories. Dalley operates on a cash basis.
Required:
Prepare a budgeted income statement for year 2.
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