Question
The following information is available for year 1 for Pepper Products: Sales revenue (210,000 units) $ 3,150,000 Manufacturing costs Materials $ 168,000 Variable cash costs
The following information is available for year 1 for Pepper Products:
Sales revenue (210,000 units) | $ | 3,150,000 |
Manufacturing costs | ||
Materials | $ | 168,000 |
Variable cash costs | 142,400 | |
Fixed cash costs | 337,600 | |
Depreciation (fixed) | 1,009,000 | |
Marketing and administrative costs | ||
Marketing (variable, cash) | 412,400 | |
Marketing depreciation | 159,600 | |
Administrative (fixed, cash) | 509,200 | |
Administrative depreciation | 84,800 | |
Total costs | $ | 2,823,000 |
Operating profits | $ | 327,000 |
All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to fall by 6 percent, but prices are expected to rise by 18 percent. Material costs per unit are expected to increase by 10 percent. Other unit variable manufacturing costs are expected to decrease by 11 percent per unit. Fixed cash costs are expected to increase by 5 percent.
Variable marketing costs will change with unit volume. Administrative cash costs are expected to increase by 5 percent. Inventories are kept at zero. Pepper Products operates on a cash basis.
Required:
Estimate the cash from operations expected in year 2. (Do not round intermediate calculations.)
PEPPER PRODUCTS CASH BASIS BUDGETED INCOME STATEMENT ? For Year 2
??? | ??? |
Manufacturing costs (cash): | |
???? | ???? |
???? | ???? |
???? | ???? |
???? | ???? |
Total cash manufacturing costs | $ |
Marketing and administrative costs: | |
???? | ???? |
???? | ???? |
???? | ???? |
Total cash marketing and administrative costs | $ |
Total Cash costs | $ |
???? | ???? |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started