Executive officers of Benson Company are wrestling with their budget for the next year. The following are two different sales estimates provided by two different sources. Source of Estimate Sales manager Marketing consultant First Quarter Second Quarter $ 373,000 521, 000 $ 317,000 469,000 Third Quarter $ 284,000 413,000 Fourth Quarter $ 481,000 659,000 Benson's past experience indicates that cost of goods sold is about 65 percent of sales revenue. The company tries to maintain 10 percent of the next quarter's expected cost of goods sold as the current quarter's ending inventory. This year's ending inventory is $35,000. Next year's ending inventory is budgeted to be $36,000. Required a. Prepare an inventory purchases budget using the sales manager's estimate. b. Prepare an inventory purchases budget using the marketing consultant's estimate.

Executive officers of Benson Company are wrestling with their budget for the next year. The following are two different sales estimates provided by two different sources. Source of Estimate Sales manager Marketing consultant First Quarter Second Quarter $ 373,000 521, 000 $ 317,000 469,000 Third Quarter $ 284,000 413,000 Fourth Quarter $ 481,000 659,000 Benson's past experience indicates that cost of goods sold is about 65 percent of sales revenue. The company tries to maintain 10 percent of the next quarter's expected cost of goods sold as the current quarter's ending inventory. This year's ending inventory is $35,000. Next year's ending inventory is budgeted to be $36,000. Required a. Prepare an inventory purchases budget using the sales manager's estimate. b. Prepare an inventory purchases budget using the marketing consultant's estimate.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 18E: Carmichael Corporation is in the process of preparing next years budget. The pro forma income...

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Carmichael Corporation is in the process of preparing next years budget. The pro forma income statement for the current year is as follows: Required: 1. What is the break-even sales revenue (rounded to the nearest dollar) for Carmichael Corporation for the current year? 2. For the coming year, the management of Carmichael Corporation anticipates an 8 percent increase in variable costs and a 60,000 increase in fixed expenses. What is the break-even point in dollars for next year? (CMA adapted)
Executive officers of Adams Company are wrestling with their budget for the next year. The following are two different sales estimates provided by two difference sources. Source of Estimate First Quarter Second Quarter Third Quarter Fourth Quarter Sales manager $ 378,000 $ 316,000 $ 271,000 $ 480,000 Marketing consultant 512,000 469,000 403,000 648,000 Adams’s past experience indicates that cost of goods sold is about 60 percent of sales revenue. The company tries to maintain 15 percent of the next quarter’s expected cost of goods sold as the current quarter’s ending inventory. This year’s ending inventory is $30,000. Next year’s ending inventory is budgeted to be $31,000. Required Prepare an inventory purchases budget using the sales manager’s estimate. Prepare an inventory purchases budget using the marketing consultant’s estimate.
Executive officers of Munoz Company are wrestling with their budget for the next year. The following are two different sales estimates provided by two different sources. Source of Estimate Sales manager Marketing consultant First Quarter $ 388,000 517,000 Complete this question by entering your answers in the tabs below. Sales Munoz's past experience indicates that cost of goods sold is about 60 percent of sales revenue. The company tries to maintain 20 percent of the next quarter's expected cost of goods sold as the current quarter's ending Inventory. This year's ending Inventory is $35,000. Next year's ending Inventory is budgeted to be $36,000. Required a. Prepare an Inventory purchases budget using the sales manager's estimate. b. Prepare an Inventory purchases budget using the marketing consultant's estimate. Required A Required B Prepare an inventory purchases budget using the sales manager's estimate. Note: Round your final answers to nearest whole dollar amount. Total inventory…
Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow: Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income First Quarter $176,000 105,600 70,400 17,600 $ 52,800 Second Quarter $206,000 123,600 82,400 20,600 $ 61,800 Third Quarter $216,000 129,600 86,400 21,600 $ 64,800 Fourth Quarter $266,000 159,600 106,400 26,600 $ 79,800 Total $864,000 518,400 345,600 86,400 $259,200 Historically, cost of goods sold is about 60 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue. Fred Arvada, the chief executive officer, told Mr. Long that he expected sales next year to be 15 percent for each respective quarter above last year's level. However, Rita Banks, the vice president of sales, told Mr. Long that she believed sales growth would be only 10 percent. Required a. Prepare a pro forma income statement…
Top executive officers of Rundle Company, a merchandising firm, are preparing the next year's budget. The controller has provide everyone with the current year's projected income statement. Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income Current Year $ 1,998,800 1,425,000 475,000 266,000 $ 209,000 Cost of goods sold is usually 75 percent of sales revenue, and selling and administrative expenses are usually 10 percent of sales a fixed cost of $76,000. The president has announced that the company's goal is to increase net income by 10 percent. Required The following items are independent of each other: a. Prepare a pro forma income statement. What percentage increase in sales would enable the company to reach its goal? b. The market may become stagnant next year, and the company does not expect an increase in sales revenue. The production manager believes that an improved production procedure can cut cost of goods sold by 1 percent. Prepare a…
Top executive officers of Rundle Company, a merchandising firm, are preparing the next year's budget. The controller has provided everyone with the current year's projected income statement. Sales revenue Cost of goods sold Gross profit Selling & administrative expenses Net income Current Year $ 2,300,000 1,725,000 575,000 308,000 $ 267,000 Cost of goods sold is usually 75 percent of sales revenue, and selling and administrative expenses are usually 10 percent of sales plus a fixed cost of $78,000. The president has announced that the company's goal is to increase net income by 15 percent. Required The following items are independent of each other: a. Prepare a pro forma income statement. What percentage increase in sales would enable the company to reach its goal? b. The market may become stagnant next year, and the company does not expect an increase in sales revenue. The production manager believes that an improved production procedure can cut cost of goods sold by 1 percent.…
Executive officers of Fanning Company are wrestling with their budget for the next year. The following are two different sales estimates provided by two different sources. Source of Estimate Sales manager Marketing consultant Fanning's past experience indicates that cost of goods sold is about 60 percent of sales revenue. The company tries to maintain 20 percent of the next quarter's expected cost of goods sold as the current quarter's ending inventory. This year's ending inventory is $25,000. Next year's ending inventory is budgeted to be $26,000. Required a. Prepare an inventory purchases budget using the sales manager's estimate. b. Prepare an inventory purchases budget using the marketing consultant's estimate. Complete this question by entering y Assessment Tool iFrame tabs below. Show Transcribed Text First Quarter Second Quarter $ 383,000 $ 304,000 527,000 470,000 Sales Required A Required B Required A Prepare y purchases budget using the sales manager's estimate. Note: Round…
Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow: First Second Third Fourth Total Quarter $226,000 135,600 90,400 Quarter $276,000 Quarter Quarter $186,000 111,600 74,400 18,600 $904,000 542,400 361,600 90,400 $216,000 129,600 Sales revenue Cost of goods sold Gross profit Selling & administrative expenses 165,600 110,400 27,600 $ 82,800 86,400 21,600 22,600 $ 67,800 $ 55,800 $ 64,800 $271,200 Net income Historically, cost of goods sold is about 60 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue. Fred Arvada, the chief executive officer, told Mr. Long that he expected sales next year to be 15 percent for each respective quarter above last year's level. However, Rita Banks, the vice president of sales, told Mr. Long that she believed sales growth would be only 10 percent. Required a. Prepare a pro forma income statement…
Reton Company is reviewing the results of itts production during tthe most recent fiscal year. Due to seasonality of the business, the volume of production fluctuates during the year. Renton would like to analyze the fixed and variable costs for purposes of estimating the budget for the upcoming fiscal year. The cost accountant provided the following data: UNITS PRODUCED TOTAL COST January 1,100 ₱12,530 February 1,200 13,260 March 1,400 14,720 April 1,500 15,450 May 1,800 17,640 June 2,100 19,830 July 2,000 19,100 August 1,900 18,370 September 1,400 14,720 October 1,500 15,450 November 1,300 13,990 December 1,700 16,910 TOTAL 18,900 191,970 Calculate the variable cost per unit and the total fixed cost using the Average method (compare the two lowest quarters).
Reton Company is reviewing the results of itts production during tthe most recent fiscal year. Due to seasonality of the business, the volume of production fluctuates during the year. Renton would like to analyze the fixed and variable costs for purposes of estimating the budget for the upcoming fiscal year. The cost accountant provided the following data: UNITS PRODUCED TOTAL COST January 1,100 ₱12,530 February 1,200 13,260 March 1,400 14,720 April 1,500 15,450 May 1,800 17,640 June 2,100 19,830 July 2,000 19,100 August 1,900 18,370 September 1,400 14,720 October 1,500 15,450 November 1,300 13,990 December 1,700 16,910 TOTAL 18,900 191,970 Calculate the variable cost per unit and the total fixed cost using the Graphical method.
Jacob Long, the controller of Arvada Corporation, is trying to prepare a sales budget for the coming year. The income statements for the last four quarters follow: First Quarter Second Quarter Third Quarter Sales revenue Cost of goods sold $ 187,000 (130,900) Gross profit Selling & administrative expenses Net income 56,100 (18,700) $ 37,400 $ 217,000 (151,900) 65,100 (21,700) $ 43,400 $ 227,000 (158,900) Fourth Quarter $ 277,000 68,100 (22,700) (193,900) 83,100 (27,700) Total $ 908,000 (635,600) 272,400 (90,800) $ 45,400 $ 55,400 $ 181,600 Historically, cost of goods sold is about 70 percent of sales revenue. Selling and administrative expenses are about 10 percent of sales revenue. Fred Arvada, the chief executive officer, told Mr. Long that he expected sales next year to be 10 percent for each respective quarter above last year's level. However, Rita Banks, the vice president of sales, told Mr. Long that she believed sales growth would be only 5 percent. Required a. Prepare a pro…
Reton Company is reviewing the results of itts production during tthe most recent fiscal year. Due to seasonality of the business, the volume of production fluctuates during the year. Renton would like to analyze the fixed and variable costs for purposes of estimating the budget for the upcoming fiscal year. The cost accountant provided the following data: UNITS PRODUCED TOTAL COST January 1,100 ₱12,530 February 1,200 13,260 March 1,400 14,720 April 1,500 15,450 May 1,800 17,640 June 2,100 19,830 July 2,000 19,100 August 1,900 18,370 September 1,400 14,720 October 1,500 15,450 November 1,300 13,990 December 1,700 16,910 TOTAL 18,900 191,970 Required: Calculate the variable cost per unit and the total fixed cost using the following: High-low point method Average method (compare the two lowest quarters) Graphical method Method of least squares