Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Alaskas Permanent Fund Dividend Examining Its Suitability As A Model

Authors: K. Widerquist, M. Howard

2nd Edition

0230112072, 9780230112070

More Books

Students also viewed these Accounting questions

Question

What is a business area?

Answered: 1 week ago

Question

=+c) The change in your pocket by year minted. Section 22.2

Answered: 1 week ago

Question

I dont trust that theyll keep my complaint confi dential.

Answered: 1 week ago