All depreciation charges are fixed. Old manufacturing equipment with an annual d

Question

All depreciation charges are fixed. Old manufacturing equipment with an annual depreciation charge of $14,550 will be replaced in year 2 with new equipment that will incur an annual depreciation charge of $21,000. Sales volume and prices are expected to increase by 12 percent and 6 percent, respectively. On a per unit basis, expectations are that materials costs will increase by 10 percent and variable manufacturing costs will decrease by 4 percent. Fixed manufacturing costs are expected to decrease by 7 percent.

     Variable marketing costs will change with volume. Administrative cash costs are expected to increase by 8 percent. Inventories are kept at zero. Cameron operates on a cash basis.

Estimate the cash from operations expected in year 2. (Do not round intermediate calculations. Round your answers to the nearest dollar amount.) GL Codes: Sales Revenue, administrative, depreciation, fixed cash costs, fixed service costs, marketing (variable, cash), Materials, Variable cash costs.

Explanation / Answer

Statement showing Cash Details Particulars Amount Sales Volume                     14,000.00 Sales Pice                             94.89 Sales Revenue               1,328,476.80 Total cash revenue               1,328,476.80 Materials                  (245,784.00) Variable cash costs                (291,755.52) Fixed Costs                (100,440.00) Variable marketing costs                (159,600.00) Admin Costs                (145,978.20) Total Cash costs                (943,557.72) Net cash from Operations                   384,919.08

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.