Reference no: EM131814061
Question - Prepare Budgeted Financial Statements
The following information is available for year 1for Dancer Components:
Revenues (300,000units) $5,700,000
Manufacturing costs
Material $ 336,000
Variable cash costs 284,800
Fixed cash costs 655,200
Depreciation (fixed) 1,998,000
Marketing and administrative costs
Marketing (variable, cash) 844,800
Marketing depreciation 299,200
Administrative (fixed, cash) 1,018,400
Administrative depreciation 149,600
All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to increase by 18 percent, but prices are expected to fall by 5 percent. Material costs per unit are expected to decrease by 8 percent. Other unit variable manufacturing costs are expected to decrease by 2 percent per unit. Fixed manufacturing costs are expected to increase by 5 percent.
Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 10 percent. Inventories are kept at zero. Dancer operates on a cash basis.
Required - Prepare a budgeted income statement for year 2.
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