The following information is available for Fairmount Industries from year 1 operations: Sales revenue (45,000 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 (losses) All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $22,000 will be fully depreciated by the end of year 1 and will not be replaced with new equipment because it is still operating to specification. Sales volume is expected to decrease by 2 percent. Sales price is expected to increase by 8 percent. On a per-unit basis, expectations are that materials costs will decrease by 5 percent and variable manufacturing cash costs will increase by 4 percent. Fixed cash manufacturing costs are expected to increase by 12 percent. Variable marketing costs will change with volume. Administrative cash costs are expected to decrease by 15 percent. Inventories are kept at zero. Fairmount Industries operates on a cash basis. No change is expected in marketing or administrative depreciation. Fairmount Industries Cash Basis Budgeted Income Statement For Year 2 Problem 13-59 (Static) Estimate Cash from Operations (LO 13-4) Required: Estimate the cash from operations expected in year 2. Manufacturing costs: Total manufacturing costs Marketing and administrative costs: Total cash marketing and administrative costs Total cash costs $ 1,575,000 $ 240,000 545,000 327,000 160,000 $ 171,000 41,000 162,000 15,000 $ 1,661,000 $ (86,000) $ $ 0 0 0
The following information is available for Fairmount Industries from year 1 operations: Sales revenue (45,000 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 (losses) All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $22,000 will be fully depreciated by the end of year 1 and will not be replaced with new equipment because it is still operating to specification. Sales volume is expected to decrease by 2 percent. Sales price is expected to increase by 8 percent. On a per-unit basis, expectations are that materials costs will decrease by 5 percent and variable manufacturing cash costs will increase by 4 percent. Fixed cash manufacturing costs are expected to increase by 12 percent. Variable marketing costs will change with volume. Administrative cash costs are expected to decrease by 15 percent. Inventories are kept at zero. Fairmount Industries operates on a cash basis. No change is expected in marketing or administrative depreciation. Fairmount Industries Cash Basis Budgeted Income Statement For Year 2 Problem 13-59 (Static) Estimate Cash from Operations (LO 13-4) Required: Estimate the cash from operations expected in year 2. Manufacturing costs: Total manufacturing costs Marketing and administrative costs: Total cash marketing and administrative costs Total cash costs $ 1,575,000 $ 240,000 545,000 327,000 160,000 $ 171,000 41,000 162,000 15,000 $ 1,661,000 $ (86,000) $ $ 0 0 0
Chapter12: Balanced Scorecard And Other Performance Measures
Section: Chapter Questions
Problem 6EA: During the current year, Sokowski Manufacturing earned income of $350,000 from total sales of...
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