Question
The following information is available for year 1 for Pepper Products: Sales revenue (300,000 units) $ 8,100,000 Manufacturing costs Materials $ 478,000 Variable cash costs
The following information is available for year 1 for Pepper Products:
Sales revenue (300,000 units) | $ | 8,100,000 |
Manufacturing costs | ||
Materials | $ | 478,000 |
Variable cash costs | 406,000 | |
Fixed cash costs | 935,000 | |
Depreciation (fixed) | 2,851,000 | |
Marketing and administrative costs | ||
Marketing (variable, cash) | 1,205,000 | |
Marketing depreciation | 428,000 | |
Administrative (fixed, cash) | 1,456,000 | |
Administrative depreciation | 213,000 | |
Total costs | $ | 7,972,000 |
Operating profits | $ | 128,000 |
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 16 percent. Material costs per unit are expected to increase by 9 percent. Other unit variable manufacturing costs are expected to decrease by 7 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 2 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. Round your final answers to the nearest whole dollar amounts.)
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