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Problem 13-52 (Algo) Estimate Cash from Operations (LO 13-5)

The following information is available for year 1 for Pepper Products:

Sales revenue (200,000 units)	$	2,900,000
Manufacturing costs
Materials	$	158,000
Variable cash costs		142,400
Fixed cash costs		337,600
Depreciation (fixed)		999,000
Marketing and administrative costs
Marketing (variable, cash)		422,400
Marketing depreciation		149,600
Administrative (fixed, cash)		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 fall by 4 percent, but prices are expected to rise by 16 percent. Material costs per unit are expected to increase by 14 percent. Other unit variable manufacturing costs are expected to decrease by 10 percent per unit. Fixed cash costs are expected to increase by 4 percent.

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

Required:

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

	PEPPER PRODUCTS Cash Basis Budgeted Income Statement For Year 2
Sales Revenue
Manufacturing Costs (cash):
Materials
Other Variable Costs
Fixed Cash Costs
Total cash Manufacturing Costs
Marketing and Administrative costs
Marketing (variable, cash)
Administrative (faxed, Cash)
Total Cash Marketing and Administrative costs
Total Cash Costs
Cash Operating Profit

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