The following information is available for year 1 for Dancer Components:
Variable cash costs
Fixed cash costs
Marketing and administrative
Marketing (variable, cash)
Administrative (fixed, cash)
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.
Prepare a budgeted income statement for year 2.