Question - Prepare Budgeted Financial Statements

The following information is available for year 1for Dancer Components:

Revenues (300,000units)                                              $5,700,000

Manufacturing costs

                Material                                                               $   336,000

                Variable cash costs                                               284,800

                Fixed cash costs                                                                     655,200

                Depreciation (fixed)                                          1,998,000

Marketing and administrative costs

                Marketing (variable, cash)                                844,800

                Marketing depreciation                                                     299,200

                Administrative (fixed, cash)                           1,018,400

                Administrative depreciation                             149,600

All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to increase by 18 percent, but prices are expected to fall by 5 percent. Material costs per unit are expected to decrease by 8 percent. Other unit variable manufacturing costs are expected to decrease by 2 percent per unit. Fixed manufacturing costs are expected to increase by 5 percent.

Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 10 percent. Inventories are kept at zero. Dancer operates on a cash basis.

Required - Prepare a budgeted income statement for year 2.