Question

                        The following information is available for 2019 for Dragon Products:

                        Revenue (100,000 units)                                             $900,000

                        Manufacturing costs:                              

                        Materials                                                                        60,000

                        Variable overhead cash costs                                        50,000

                        Fixed overhead cash costs                                            100,000

                        Depreciation                                                                  250,000

                        Marketing and administrative costs:                           

                        Variable marketing cash costs                                       100,000

                        Marketing depreciation                                                    50,000

                        Administrative cash costs                                              130,000

                        Administrative depreciation                                             20,000

                        Total costs                                                                   $760,000

                        Operating income                                                        $140,000

All depreciation charges are expected to remain the same for 2020. Sales volume is expected to increase by 30 percent, but prices are expected to fall by 5 percent. Material costs are expected to decrease by 5 percent. Variable manufacturing overhead cash costs are expected to decrease by 3 percent. Fixed manufacturing overhead cash costs are expected to increase by 5 percent.

Variable marketing cash costs change with volume. Administrative cash costs are expected to increase by 10 percent. Inventories are kept at zero.

Required:

                        Prepare a budgeted income statement for 2020. Round budget line items to                              

                       the nearest dollar.

Answer 1

Budgeted Income Statement
		2020
		Total	Per Unit
Revenue	130,000	$1,111,500	8.55
Manufacturing Cost
Materials		$74,100	0.57
Variable Overhead Cash Cost		$63,050	0.485
Fixed Overhead cash cost		$105,000
Depreciation		$250,000
Marketing & Administrative Cost
Variable marketing cash cost		$130,000	1
Marketing Depreciation		$50,000
Administrative cash cost		$143,000
Administrative depreciation		$20,000
Operating Income		$276,350