Prepare Budgeted Financial Statements: Cameron Parts has the following data from
ID: 2433799 • Letter: P
Question
Prepare Budgeted Financial Statements: Cameron Parts has the following data from year 1 operations,which are to be used for developing year 2 budget estimates: Revenues (25,000units) $373,000 Manufacturing costs: Materials $66,500 Varible cashcosts $90,450 Fixed cashcosts 36,000 Depreciation(fixed) 44,500 Marketing and administrative costs: Marketing (variable,cash) 47,500 Marketingdepreciation 11,300 Administrative (fixed,cash) 45,055 Administrativedepreciation 4,200 Totalcosts $345,505 Operatingprofits $27,495 All depreciation charges are fixed. Old manufacturingequipment with an annual depreciation charge of $4,850 will bereplaced in year 2 with new equipment that will incur an annualdepreciation charge of $7,000. Sales volume and prices are expectedto increase by 12 percent and 6 percent, respectively. On a perunit basis, expectations are that materials costs will increase by10 percent and variable manufacturing costs will decrease by 4percent. Fixed manufacturing costs are expected to decrease by 7percent. 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 cashbasis. Required: Prepare a budgeted income statement for year 2. Prepare Budgeted Financial Statements: Cameron Parts has the following data from year 1 operations,which are to be used for developing year 2 budget estimates: Revenues (25,000units) $373,000 Manufacturing costs: Materials $66,500 Varible cashcosts $90,450 Fixed cashcosts 36,000 Depreciation(fixed) 44,500 Marketing and administrative costs: Marketing (variable,cash) 47,500 Marketingdepreciation 11,300 Administrative (fixed,cash) 45,055 Administrativedepreciation 4,200 Totalcosts $345,505 Operatingprofits $27,495 All depreciation charges are fixed. Old manufacturingequipment with an annual depreciation charge of $4,850 will bereplaced in year 2 with new equipment that will incur an annualdepreciation charge of $7,000. Sales volume and prices are expectedto increase by 12 percent and 6 percent, respectively. On a perunit basis, expectations are that materials costs will increase by10 percent and variable manufacturing costs will decrease by 4percent. Fixed manufacturing costs are expected to decrease by 7percent. 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 cashbasis. Required: Prepare a budgeted income statement for year 2.Explanation / Answer
$46,650
$53,200
$11,300
$48,659
$4,200
$117,359
Revenues (28,000 units) $442,826 Cost of Goods Sold (See Schedule 1) $259,310 Gross Profit $183,516 Marketing and administrative cost (See Schedule 2) $117,359 Operating Profit $66,157