Refer to the data in Problem 13-49. Estimate the cash from operations expected in year 2. Data
Question:
Refer to the data in Problem 13-49. Estimate the cash from operations expected in year 2.
Data From Exercise 13-49:
Gulf States Manufacturing has the following data from year 1 operations, which are to be used for developing year 2 budget estimates:
All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $29,100 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $42,000. Sales volume and prices are expected to increase by 8 percent and 3 percent, respectively. On a per-unit basis, expectations are that materials costs will increase by 6 percent and variable manufacturing costs will decrease by 5 percent. Fixed cash manufacturing costs are expected to decrease by 9 percent.
Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 10 percent. Inventories are kept at zero. Gulf States operates on a cash basis.
Step by Step Answer:
Fundamentals of Cost Accounting
ISBN: 978-1259565403
5th edition
Authors: William Lanen, Shannon Anderson, Michael Maher