Question

Cycle-1 is a fast-growing start-up firm that manufactures bicycles. The following income statement is available for October:

Sales revenue (510 units @ $800 per unit)	$408,000
Less
Manufacturing costs
Variable costs	25,000
Depreciation (fixed)	27,000
Marketing and administrative costs
Fixed costs (cash)	65,900
Depreciation (fixed)	22,800
Total costs	$140,700
Operating profits	$267,300

Sales volume is expected to increase by 20 percent in November, but the sales price is expected to fall 10 percent. Variable manufacturing costs are expected to increase by 3 percent per unit in November. In addition to these cost changes, variable manufacturing costs also will change with sales volume. Marketing and administrative cash costs are expected to increase by 10 percent.

Cycle-1 operates on a cash basis and maintains no inventories. Depreciation is fixed and should remain unchanged over the next three years.

Required:

Prepare a budgeted income statement for November. (Do not round intermediate calculations.)

Answer 1

solution Budgeted Income Statement for November sales revenue ( 510 units X 1206%X 800 x 904.) 440640 (30894) (27000) less! Manufacturing coste : Variable coste ( 510 y 1204 X 49.01 X 103%) Depreciation (fixed) Marketing and administrative coste : fixed costs (cash) [65900 x 110%] Depreciation (fixed) Total Costs (22490) .(?2800) (152184) 287456 operating profits * 25000 / 510 = 49001