Dalley Inc. has the following information for its first year ofoperations:
| | | |
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 remainthe same for year 2. Sales volume is expected to increase by 15%,but sales prices are expected to fall by 5%. Material costs perunit are expected to decrease by 6%. Other unit variablemanufacturing costs are expected to decrease by 2% per unit. Fixedmanufacturing costs (other than depreciation) are expected toincrease by 5%.
Variable marketing costs per unit will remain constant.Administrative costs (other than depreciation) are expected toincrease by 10%.
Assume there are no inventories. Dalley operates on a cashbasis.
Required:
Prepare a budgeted income statement for year 2.
