cost accounting ass

13-36. Prepare Budgeted Financial Statements

Dancer Components

Budgeted income statement for year 2

Revenues (354,000*$18.05). . . . . . . . . . …………………………………………. $6,389,700

Manufacturing costs
Materials ($1.0304*354,000). . . . . . . . . . . . . . . …………$ 364,762
Variable cash costs (354000*0.9303) . . . . . . . . . . . . . ……329,331
Fixed cash costs (655,200*(1.05) . . . . . . . . . . . . . . . ……..687,960
Depreciation (fixed) . . . . . . . . . . . . . ……………………..1,998,000
Marketing and administrative costs
Marketing (variable, cash) (354000*2.816). . . . . . . …….. 996,864
Marketing depreciation . . . . . . . . . ……………………….299,200
Administrative (fixed, cash) (1,018,400*1.1)……………..1,120,240
Administrative depreciation . . . . . . . ……………………..149,600
Total costs . . . . . . . . . . . . . . . . . . ………………………………………………….. $5,945,957
Operating profits . . . . . . . . . . . . . . . . ……………………………………………… $ 443,743

Calculations

  • 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.

New Sales volume =300,000 units+ 18%*300,000 units = 354,000 units

Old Price=$5,700,000/300000= $19

New price = (100%-5%)*19= $18.05

  • 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.

Old Material costs per unit= 336,000/300000= $1.12

New material cost per unit = (100-8)%*1.12= $1.0304

Old Variable cash costs per unit= 284,800/300000= $0.9493

New Variable cash costs per unit= 98%*0.949333= $0.9303

  • Fixed manufacturing costs are expected to increase by 5 percent.

New Fixed cash costs = 655,200*(100+5)% = $687,960

  • Variable marketing costs will change with volume.

New Marketing (variable, cash) = 844,800/300000)*354,000= $

  • Administrative cash costs are expected to increase by 10 percent.

New Administrative (fixed, cash) =1,018,400*(100+10)% = $1,120,240

  • Inventories are kept at zero.
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