Dalley Inc. has the following information for its first year of operations: Revenues (200,000 units) $...

Dalley Inc. has the following information for its first year of operations:


Revenues (200,000 units)	$	2,900,000
Manufacturing costs:
Materials	$	168,000
Variable cash costs		142,400
Fixed cash costs		327,600
Depreciation (fixed)		999,000

Marketing (variable)		422,400
Marketing depreciation		149,600
Administrative (fixed)		509,200
Administrative depreciation		74,800
Total costs	$	2,793,000
Operating profits	$	107,000

All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to increase by 15%, but sales prices are expected to fall by 5%. Material costs per unit are expected to decrease by 6%. Other unit variable manufacturing costs are expected to decrease by 2% per unit. Fixed manufacturing costs (other than depreciation) are expected to increase by 5%.

Variable marketing costs per unit will remain constant. Administrative costs (other than depreciation) are expected to increase by 10%.

Assume there are no inventories. Dalley operates on a cash basis.

Required:

Prepare a budgeted income statement for year 2.

Expert Solution

*Income Statement for Dalley Inc.*
	*Budgeted for next year*			Current given in question
*Particulars*	*No. of units*	*Per Unit*	*Total*	No. of units	Per Unit	Total
Revenue	2,30,000	13.775	31,68,250	2,00,000	14.5	29,00,000
Manufacturing Costs :
Materials	2,30,000	0.7896	1,81,608	2,00,000	0.84	1,68,000
Variable Cash Costs	2,30,000	0.6978	1,60,485	2,00,000	0.712	1,42,400
Fixed Cash Costs			3,43,980			3,27,600
Depreciation (Fixed)			9,99,000			9,99,000
Marketing (Variable)	2,30,000	2.112	4,85,760	2,00,000	2.112	4,22,400
Marketing Depreciation			1,49,600			1,49,600
Administrative (Fixed)			5,60,120			5,09,200
Administrative Depreciation			74,800			74,800
Total Costs			29,55,353			27,93,000
Operating Profits			2,12,897			1,07,000

Note : Current given income statement has been used above for calculation purposes.
Example : Materials cost in current year per unit = 0.84
Hence Material costs in budgeted year = 0.8494% = 0.7896 (as they are expected to decrease by 6%)*

ekkarill92 answered 11 months ago

Alpaca Corporation had revenues of $220,000 in its first year of operations. The company has not...

Alpaca Corporation had revenues of $220,000 in its first year of operations. The company has not collected on $19,100 of its sales and still owes $26,800 on $90,000 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $11,000 in salaries. Owners invested $23,000 in the business and $23,000 was borrowed on a five-year note. The company paid $3,400 in interest that was the amount owed for the year, and...

Alpaca Corporation had revenues of $315,000 in its first year of operations. The company has not...

Alpaca Corporation had revenues of $315,000 in its first year of operations. The company has not collected on $20,200 of its sales and still owes $28,300 on $97,500 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $14,000 in salaries. Owners invested $20,500 in the business and $20,500 was borrowed on a five-year note. The company paid $4,900 in interest that was the amount owed for the year, and...

Alpaca Corporation had revenues of $275,000 in its first year of operations. The company has not...

Alpaca Corporation had revenues of $275,000 in its first year of operations. The company has not collected on $19,400 of its sales and still owes $27,500 on $98,500 of merchandise it purchased. The company had no inventory on hand at the end of the year. The company paid $13,200 in salaries. Owners invested $16,500 in the business and $16,500 was borrowed on a five-year note. The company paid $4,200 in interest that was the amount owed for the year, and...

Houston,Inc., planned and actually manufactured 200,000 units of its single product in 2017, its first year...

Houston,Inc., planned and actually manufactured 200,000 units of its single product in 2017, its first year of operation. Variable manufacturing cost was $ 24 per unit produced. Variable operating (nonmanufacturing) cost was $9 per unit sold. Planned and actual fixed manufacturing costs were $600,000.Planned and actual fixed operating (nonmanufacturing) costs totaled $370,000. Houston sold 100,000 units of product at $ 45 per unit Houston’s 2017 operating income using absorption costing is (a) $530,000, (b) $230,000, (c) $600,000, (d) $900,000, (e)...

Intermediate Accounting II Teri Inc., in its first year of operations, has the following differences...

Intermediate Accounting II Teri Inc., in its first year of operations, has the following differences between the book basis and tax basis of its assets and liabilities at the end of 20x0. Book Basis Tax Basis Equipment (net) $400,000 $340,000 Estimated warranty liability $200,000 $ -0- It is estimated that the warranty liability will be settled in 20x1. The difference in equipment (net) will result in taxable amounts of $20,000 in 20x1, $30,000 in 20x2, and $10,000 in...

Exercise 19-18 Larkspur Inc., in its first year of operations, has the following differences between the...

Exercise 19-18 Larkspur Inc., in its first year of operations, has the following differences between the book basis and tax basis of its assets and liabilities at the end of 2016. Book Basis Tax Basis Equipment (net) $367,000 $306,000 Estimated warranty liability $191,000 $ 0 It is estimated that the warranty liability will be settled in 2017. The difference in equipment (net) will result in taxable amounts of $18,700 in 2017, $31,500 in 2018, and $10,800 in 2019. The company...

Milea Inc. experienced the following events in 2018, its first year of operations:

Milea Inc. experienced the following events in 2018, its first year of operations: Received $14,500 cash from the issue of common stock. Performed services on account for $45,000. Paid the utility expense of $1,200. Collected $30,150 of the accounts receivable. Recorded $7,100 of accrued salaries at the end of the year. Paid a $1,100 cash dividend to the stockholders. Prepare the income statement, statement of changes in stockholders’ equity, balance sheet, and statement of cash flows for the 2018 accounting...

Blue Company in its first year of operations provides the following information related to one of...

Blue Company in its first year of operations provides the following information related to one of its available-for-sale debt securities at December 31, 2020. Amortized cost $51,700 Fair value 43,400 Expected credit losses 12,900 What is the amount of the credit loss that Blue should report on this available-for-sale security at December 31, 2020? Prepare the journal entry to record the credit loss, if any (and any other adjustment needed), at December 31, 2020. (Credit account titles are automatically indented...

The following information relates to Franklin Freightways for its first year of operations (data in millions...

The following information relates to Franklin Freightways for its first year of operations (data in millions of dollars): Pretax accounting income: $ 195 Pretax accounting income included: Overweight fines (not deductible for tax purposes) 5 Depreciation expense 70 Depreciation in the tax return 110 The applicable tax rate is 25%. There are no other temporary or permanent differences. Franklin's net income ($ in millions) is: Multiple Choice $134. $156.25. $147.5. $145.

Flint Company in its first year of operations provides the following information related to one of...

Flint Company in its first year of operations provides the following information related to one of its available-for-sale debt securities at December 31, 2020. Amortized cost $51,500 Fair value 43,000 Expected credit losses 12,800 1) What is the amount of the credit loss that Flint should report on this available-for-sale security at December 31, 2020? Amount of the credit loss $ _____________ 2) Prepare the journal entry to record the credit loss, if any (and any other adjustment needed), at...

Question