Rhodes, Inc., is a fast-growing start-up firm that manufactures bicycles. The following income statement is available for July:
Revenues (200 units @ $750 per unit) $ 150,000
Less
Manufacturing costs
Variable costs 21,840
Depreciation (fixed) 22,950
Marketing and administrative costs
Fixed costs (cash) 56,340
Depreciation (fixed) 19,050
Total costs $ 120,180
Operating profits $ 29,820
Sales volume is expected to increase by 20 percent in August, but the sales price is expected to fall 10 percent. Variable manufacturing costs are expected to increase by 3 percent per unit in August. 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.
Rhodes 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 August
Answers: 3
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Rhodes, Inc., is a fast-growing start-up firm that manufactures bicycles. The following income state...
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