Question
The following information is available for year 1 for Pepper Products: Sales revenue (280,000 units) $ 5,600,000 Manufacturing costs Materials $ 330,000 Variable cash costs
The following information is available for year 1 for Pepper Products:
Sales revenue (280,000 units) | $ | 5,600,000 |
Manufacturing costs | ||
Materials | $ | 330,000 |
Variable cash costs | 280,000 | |
Fixed cash costs | 645,000 | |
Depreciation (fixed) | 1,967,000 | |
Marketing and administrative costs | ||
Marketing (variable, cash) | 831,000 | |
Marketing depreciation | 295,000 | |
Administrative (fixed, cash) | 1,003,000 | |
Administrative depreciation | 147,000 | |
Total costs | $ | 5,498,000 |
Operating profits | $ | 102,000 |
All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to fall by 4 percent, but prices are expected to rise by 16 percent. Material costs per unit are expected to increase by 11 percent. Other unit variable manufacturing costs are expected to decrease by 6 percent per unit. Fixed cash costs are expected to increase by 3 percent.
Variable marketing costs will change with unit volume. Administrative cash costs are expected to increase by 4 percent. Inventories are kept at zero. Pepper Products operates on a cash basis.
Required:
Prepare a budgeted income statement for year 2. (Do not round intermediate calculations.)
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