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Panther Corporation appeared to be experiencing a good year. Sales in the first quarter were one-third ahead of last year, and the sales department predicted that this rate would continue throughout the entire year. The controller asked Janet Nomura, a summer accounting intern, to prepare a draft forecast for the year and to analyze the differences from last year's results. She based the forecast on actual results obtained in the first quarter plus the expected costs of production to be completed in the remainder of the year. She worked with various department heads (production, sales, and so on) to get the necessary information. The results of these efforts follow:

PANTHER CORPORATION Expected Account Balances for December 31, Year 2

Cash $ 5,000 Accounts receivable 322,000 Inventory (January 1, Year 2) 180,000 Plant and equipment 530,000 Accumulated depreciation $ 166,000 Accounts payable 182,000 Notes payable (due within one year) 202,000 Accrued payables 95,000 Common stock 300,000 Retained earnings 421,000 Sales revenue 2,420,000 Other income 40,000 Manufacturing costs Materials 820,000 Direct labor 850,000 Variable overhead 501,000 Depreciation 22,000 Other fixed overhead 33,000 Marketing Commissions 98,000 Salaries 66,000 Promotion and advertising 262,000 Administrative Salaries 66,000 Travel 11,000 Office costs 38,000 Income taxes Dividends 22,000 $ 3,826,000 $ 3,826,000

Adjustments for the change in inventory and for income taxes have not been made. The scheduled production for this year is 420,000 units, and planned sales volume is 370,000 units. Sales and production volume was 270,000 units last year. The company uses a full-absorption costing and FIFO inventory system and is subject to a 40 percent income tax rate. The actual income statement for last year follows:

PANTHER CORPORATION Statement of Income and Retained Earnings For the Budget Year Ended December 31, Year 1

Revenues Sales revenue $ 1,730,000 Other income 55,000 $ 1,785,000 Expenses Cost of goods sold Materials $ 470,000 Direct labor 500,000 Variable overhead 330,000 Fixed overhead 50,000 $ 1,350,000 Beginning inventory 180,000 $ 1,530,000 Ending inventory 180,000 $ 1,350,000 Selling Salaries $ 56,000 Commissions 62,000 Promotion and advertising 128,000 246,000 General and administrative Salaries $ 58,000 Travel 9,500 Office costs 34,000 101,500 Income taxes 35,000 1,732,500 Operating profit 52,500 Beginning retained earnings 390,500 Subtotal $ 443,000 Less dividends 22,000 Ending retained earnings $ 421,000

Required:

Prepared a budgeted income statement and balance sheet. (Round "Cost per unit" to 2 decimal places. Do not round any other intermediate calculations.)

PANTHER CORPORATION Budgeted Income Statement For the Year Ended December 31, Year 2 Revenue Sales revenue Other income Total Revenue $ 0 Expenses Cost of goods manufactured & sold Matenals Direct labor Vanable overhead F1xed overhead Beginning inventory 0 Ending inventory Marketing: Salaries Commissions Promotions and advertising Administrative: Salaries Travel Office costs Income taxes (credit) Total expenses Operating profit (loss) $ 0

PANTHER CORPORATION Budgeted Balance Sheet Budgeted December 31, Year 2 Current Assets Total current assets $ 0 0 Total assets $ 0 Current liabilities Total current liabilities $ 0 Shareholders' equity Total shareholders' equity 0 Total liabilities and shareholders' equity $ 0

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