Prepare Budgeted Financial Statements

The following information is available for year 1 for Dancer Components:



Revenues (300,000 units). . . . . . . . . . $5,700,000

Manufacturing costs

Materials . . . . . . . . . . . . . . . . . . . . . $ 336,000

Variable cash costs . . . . . . . . . . . . . 284,800

Fixed cash costs . . . . . . . . . . . . . . . 655,200

Depreciation (fi xed) . . . . . . . . . . . . . 1,998,000

Marketing and administrative costs

Marketing (variable, cash) . . . . . . . . 844,800

Marketing depreciation . . . . . . . . . . 299,200

Administrative (fi xed, cash) . . . . . . . 1,018,400

Administrative depreciation . . . . . . . 149,600

Total costs . . . . . . . . . . . . . . . . . . $5,586,000

Operating profits . . . . . . . . . . . . . . . . . $ 114,000



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.

Optional Information:
Level/Year: Junior
Subject: Cost Accounting