Cymbal E-Motors is a fast-growing start-up firm that manufactures electric motors for bicycles. The following income statement is available for April: Sales revenue (750 units @ $700 per unit) Less Manufacturing costs Variable costs Depreciation (fixed) Marketing and administrative costs Fixed costs (cash) Depreciation (fixed) Total costs Operating profits Required: Prepare a budgeted income statement for May. Note: Do not round intermediate calculations. Sales volume is expected to increase by 30 percent in May, but the sales price is expected to fall 5 percent. Variable manufacturing costs are expected to increase by 7.5 percent per unit in May. In addition to these cost changes, variable manufacturing costs also will change with sales volume. Marketing and administrative cash costs are expected to increase by 15 percent. Sales revenue All revenues and costs at Cymbal are cash transactions, except for depreciation. Cymbal maintains no inventories. Depreciation is fixed and is forecast to remain unchanged in the next six months. Cymbal E-Motors Budgeted Income Statement For the Month of May Manufacturing costs: Depreciation (fixed) Variable costs Total manufacturing costs Gross profit margin $ 525,000 S 49,000 58,800 49,000 S 49,000 S (49,000) 122,000 57,000 $286,800 $ 238,200

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

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Cymbal E-Motors is a fast-growing start-up firm that manufactures electric motors for bicycles. The following income statement is available for April: Sales volume is expected to increase by 30 percent in May, but the sales price is expected to fall 5 percent. Variable manufacturing costs are expected to increase by 7.5 percent per unit in May. In addition to these cost changes, variable manufacturing costs also will change with sales volume. Marketing and administrative cash costs are expected to increase by 15 percent. All revenues and costs at Cymbal are cash transactions, except for depreciation. Cymbal maintains no inventories. Depreciation is fixed and is forecast to remain unchanged in the next six months. Required: Prepare a budgeted income statement for May. Cymbal E-Motors Budgeted Income Statement For the Month of May Sales revenue Manufacturing costs: Depreciation (fixed) 49,000 Variable costs Total manufacturing costs 49.000 Gross profit margin (49.000) Marketing and administrative: Depreciation (xed) 57.000 Fixed costs (cash) 140,300 Total marketing and administrative costs 197.300 Operating profit (246,300 Note: Do not round intermediate calculations.

Sales volume is expected to increase by 30 percent in May, but the sales price is expected to fall 5 percent. Variable manufacturing
costs are expected to increase by 7.5 percent per unit in May. In addition to these cost changes, variable manufacturing costs also will
change with sales volume. Marketing and administrative cash costs are expected to increase by 15 percent.
All revenues and costs at Cymbal are cash transactions, except for depreciation. Cymbal maintains no inventories. Depreciation is
fixed and is forecast to remain unchanged in the next six months.
Required:
Prepare a budgeted income statement for May.
Note: Do not round intermediate calculations.
Sales revenue
Cymbal E-Motors
Budgeted Income Statement
For the Month of May
Manufacturing costs:
Depreciation (fixed)
Variable costs
Total manufacturing costs
Gross profit margin
Marketing and administrative:
Depreciation (fixed)
Fixed costs (cash)
Total marketing and administrative costs
Operating profit
$
S
S
S
$
49,000
49,000
(49,000)
57,000
140,300
197,300
(246,300)

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