Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2 budget estimates:         Sales revenues (37,500 units) $ 2,500,000 Manufacturing costs     Materials $ 400,000 Variable cash costs   545,000 Fixed cash costs   216,000 Depreciation (fixed)   267,000 Marketing and administrative costs     Marketing (variable, cash)   285,000 Marketing depreciation   67,800 Administrative (fixed, cash)   270,300 Administrative depreciation   25,200 Total costs $ 2,076,300 Operating profits $ 423,700     All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $29,100 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $42,000. Sales volume and prices are expected to increase by 8 percent and 3 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 6 percent and variable manufacturing costs will decrease by 5 percent. Fixed cash manufacturing costs are expected to decrease by 9 percent.   Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 10 percent. Inventories are kept at zero. Gulf States operates on a cash basis.   Problem 13-53 (Static) Prepare Budgeted Financial Statements (LO 13-4, 6) Required: Prepare a budgeted income statement for year 2.

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Chapter8: Budgeting For Planning And Control
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Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2 budget estimates:

 

     
Sales revenues (37,500 units) $ 2,500,000
Manufacturing costs    
Materials $ 400,000
Variable cash costs   545,000
Fixed cash costs   216,000
Depreciation (fixed)   267,000
Marketing and administrative costs    
Marketing (variable, cash)   285,000
Marketing depreciation   67,800
Administrative (fixed, cash)   270,300
Administrative depreciation   25,200
Total costs $ 2,076,300
Operating profits $ 423,700
 

 
All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $29,100 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $42,000. Sales volume and prices are expected to increase by 8 percent and 3 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 6 percent and variable manufacturing costs will decrease by 5 percent. Fixed cash manufacturing costs are expected to decrease by 9 percent.

 

Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 10 percent. Inventories are kept at zero. Gulf States operates on a cash basis.

 

Problem 13-53 (Static) Prepare Budgeted Financial Statements (LO 13-4, 6)

Required:

Prepare a budgeted income statement for year 2.

 

 

 

 

 
 
 
 
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