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Cameron Parts has the following data from year 1 o...

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Cameron Parts has the following data from year 1 operations, which are to be used for developing year 2 budget estimates: Revenues (12,500 units) . . . . . . . . . .$ 1,119,000 Manufacturing costs Materials . . . . . . . . . . . . . . . 199,500 Variable cash costs . . . . . . . . . . 271,350 Fixed cash costs . . . . . . . . . . . . . . 108,000 Depreciation (fixed) . . . . . . . . . . . .133,500 Marketing and administrative costs Marketing (variable, cash) . . . . . . . .142,500 Marketing depreciation . . . . . . . . . .33,900 Administrative (fixed, cash) . . . . . . . 135,165 Administrative depreciation . . . . . . .2,600 Total costs . . . . . . . . . . . . . . . . . .$1,036,515 Operating profits . . . . . . . . . .$ 82,485 All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $14,550 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $21,000. Sales volume and prices are expected to increase by 12 percent and 6 percent, respectively. On a per unit basis, expectations are that materials costs will increase by 10 percent and variable manufactur- ing costs will decrease by 4 percent. Fixed manufacturing costs are expected to decrease by 7 percent. Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 8 percent. Inventories are kept at zero. Cameron operates on a cash basis. Required Prepare a budgeted income statement for year 2.

 

Paper#6154 | Written in 18-Jul-2015

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