The following information is available for year 1 for Pepper Products: Sales revenue (120,000 units) Manufacturing costs Materials Variable cash costs Fixed cash costs Depreciation (fixed) Marketing and administrative costs Marketing (variable, cash) Marketing depreciation Administrative (fixed, cash) Administrative depreciation Total costs Operating profits $2,760,000 PEPPER PRODUCTS Budgeted Income Statement For Year 2 164,000 140,000 323,000 985,000 $ Manufacturing costs: 416,000 147,000 500,000 74,000 $2,749,000 11,000 All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to fall by 8 percent, but prices are expected to rise by 14 percent. Material costs per unit are expected to increase by 15 percent. Other unit variable manufacturing costs are expected to decrease by 8 percent per unit. Fixed cash costs are expected to increase by 7 percent. Variable marketing costs will change with unit volume. Administrative cash costs are expected to increase by 8 percent. Inventories are kept at zero. Pepper Products operates on a cash basis. Required: Prepare a budgeted income statement for year 2. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.) 4
The following information is available for year 1 for Pepper Products: Sales revenue (120,000 units) Manufacturing costs Materials Variable cash costs Fixed cash costs Depreciation (fixed) Marketing and administrative costs Marketing (variable, cash) Marketing depreciation Administrative (fixed, cash) Administrative depreciation Total costs Operating profits $2,760,000 PEPPER PRODUCTS Budgeted Income Statement For Year 2 164,000 140,000 323,000 985,000 $ Manufacturing costs: 416,000 147,000 500,000 74,000 $2,749,000 11,000 All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to fall by 8 percent, but prices are expected to rise by 14 percent. Material costs per unit are expected to increase by 15 percent. Other unit variable manufacturing costs are expected to decrease by 8 percent per unit. Fixed cash costs are expected to increase by 7 percent. Variable marketing costs will change with unit volume. Administrative cash costs are expected to increase by 8 percent. Inventories are kept at zero. Pepper Products operates on a cash basis. Required: Prepare a budgeted income statement for year 2. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.) 4
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:The following information is available for year 1 for Pepper Products:
Sales revenue (120,000 units)
Manufacturing costs
Materials
Variable cash costs
Fixed cash costs
Depreciation (fixed)
Marketing and administrative costs.
Marketing (variable, cash)
Marketing depreciation
Administrative (fixed, cash)
Administrative depreciation
Total costs
Operating profits
$2,760,000
$164,000
140,000
323,000
985,000
All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to fall by 8 percent, but
prices are expected to rise by 14 percent. Material costs per unit are expected to increase by 15 percent. Other unit variable
manufacturing costs are expected to decrease by 8 percent per unit. Fixed cash costs are expected to increase by 7 percent.
PEPPER PRODUCTS
Budgeted Income Statement
For Year 2
Manufacturing costs:
416,000
147,000
500,000
74,000
$2,749,000
11,000
Variable mar
costs will change with unit volume. Administrative cash costs are expected to increase by 8 percent. Inventories
are kept at zero. Pepper Products operates on a cash basis.
Total manufacturing costs
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Required:
Prepare a budgeted income statement for year 2. (Do not round intermediate calculations. Round your final answers to the nearest
whole dollar amounts.)
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