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Required information [The following information applies to the questions displayed below.] Gulf States Manufacturing has the following data from year 1 operations, which are to
Required information [The following information applies to the questions displayed below.] Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2 budget estimates: All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $15,050 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $21,500. Sales volume and prices are expected to increase by 7 percent and 3 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 5 percent and variable manufacturing costs will decrease by 2 percent. Fixed cash manufacturing costs are expected to decrease by 3 percent. Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 3 percent. Inventories are kept at zero. Gulf States operates on a cash basis. Required: Prepare a budgeted income statement for year 2. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.) Required: Estimate the cash from operations expected in year 2. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.)
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