03 Jan Easecom Company is a manufacturer of video-confere
Easecom Company is a manufacturer of video-conferencing products. Regular units are manufactured to meet marketing projections, and specialized units are made after an order is received. Maintaining the video-conferencing equipment is an important area of customer satisfaction. With the recent downturn in the computer industry, the video-conferencing equipment segment has suffered, leading to a decline in Easecom’s financial performance. The following income statement shows results for 2012. 1. Selling prices of equipment are expected to increase by 10% as the economic recovery begins. The selling price of each maintenance contract is expected to remain unchanged from 2012. 2. Equipment sales in units are expected to increase by 6%, with a corresponding 6% growth in units of maintenance contracts. 3. Cost of each unit sold is expected to increase by 3% to pay for the necessary technology and quality improvements. 4. Marketing costs are expected to increase by $250,000, but administration costs are expected to remain at 2012 levels. 5. Distribution costs vary in proportion to the number of units of equipment sold. 6. Two maintenance technicians are to be hired at a total cost of $130,000, which covers wages and related travel costs. The objective is to improve customer service and shorten response time. 7. There is no beginning or ending inventory of equipment. REQUIRED Prepare a budgeted income statement for the year ending December 31, 2013.
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