Question

Problem 13-53 & 13-54 (Algo) (LO 13-4, 5, 6)

[The following information applies to the questions displayed below.]

Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2 budget estimates:

Sales revenues (18,000 units)	$	1,620,000
Manufacturing costs
Materials	$	289,000
Variable cash costs		395,000
Fixed cash costs		159,000
Depreciation (fixed)		195,000
Marketing and administrative costs
Marketing (variable, cash)		208,000
Marketing depreciation		51,000
Administrative (fixed, cash)		204,000
Administrative depreciation	$	18,000
Total costs	$	1,519,000
Operating profits	$	101,000

All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $16,150 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $22,600. Sales volume and prices are expected to increase by 10 percent and 6 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 8 percent and variable manufacturing costs will decrease by 2 percent. Fixed cash manufacturing costs are expected to decrease by 6 percent.

Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 6 percent. Inventories are kept at zero. Gulf States operates on a cash basis.

Estimate the cash from operations expected in year 2. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amounts.)

GULF STATES MANUFACTURING

Cash Basis Budgeted Income Statement - For Year 2

Sales Revenue	$
Manufacturing Costs:
Materials	$
Variable Cash Cost	$
Fixed Cash Cost	$
Depreciation Fixed	$
Total Manufacturing Cost	$
Marketing and Admin Cost:
Marketing (variable, cash)	$
Marketing Depreciation	$
Administrative (fixed, cash)	$
Administrative depreciation	$
Total Marketing and Admin Costs	$
Total Costs	$
Operating Profits	$

Answer 1

THE SOLUTION IS PROVIDED WITH ALL THE WORKINGS IN THE ABOVE TABLE