Question

In: Accounting

Crane Company produces a molded briefcase that is distributed to luggage stores. The following operating data...

Crane Company produces a molded briefcase that is distributed to luggage stores. The following operating data for the current year has been accumulated for planning purposes.

Sales price$34

Variable cost of goods sold10

Variable selling expenses9.0

Variable administrative expenses3

Annual fixed expenses

Overhead$6,396,000

Selling expenses1,353,000

Administrative expenses2,583,000

Crane can produce 1,230,000 million cases a year. The projected net income for the coming year is expected to be $1,476,000 million. Crane is subject to a 40% income tax rate.

During the planning sessions, Crane’s managers have been reviewing costs and expenses. They estimate that the company’s variable cost of goods sold will increase 15% in the coming year and that fixed administrative expenses will increase by $123,000. All other costs and expenses are expected to remain the same.

What amount of sales revenue will Crane need to achieve in the coming year to earn the projected net income of $1,476,000 million?

What price would Crane need to charge for the briefcase in the coming year to maintain the current year’s contribution margin ratio?

Expert Solution

Hope you understood the solution. If you have any doubt please leave your doubt in the comment section so that I can clarify your doubt.

Thank You.

ekkarill92 answered 5 months ago

Kipmar Company produces a molded briefcase that is distributed to luggage stores. The following operating data...

Kipmar Company produces a molded briefcase that is distributed to luggage stores. The following operating data for the current year has been accumulated for planning purposes. Sales price $40.00 Variable cost of goods sold 12.00 Variable selling expenses 10.60 Variable administrative expenses 3.00 Annual fixed expenses Overhead $7,800,000 Selling expenses 1,550,000 Administrative expenses 3,250,000 Kipmar can produce 1,500,000 cases a year. The projected net income for the coming year is expected to be $1,800,000. Kipmar is subject to a 40%...

Type or paste question here Kipmar Company produces a molded briefcase that is distributed to luggage...

Type or paste question here Kipmar Company produces a molded briefcase that is distributed to luggage stores. The following operating data for the current year has been accumulated for planning purposes. Sales price $ 80.00 Variable cost of goods sold 24.00 Variable selling expenses 21.20 Variable administrative expenses 6.00 Annual fixed expenses Overhead $ 7,800,000 Selling expenses 1,550,000 Administrative expenses 3,250,000 Kipmar can produce 1.5 million cases a year. The projected net income for the...

Problem 3-38 (Part Level Submission) Ivanhoe Company produces a molded briefcase that is distributed to luggage...

Problem 3-38 (Part Level Submission) Ivanhoe Company produces a molded briefcase that is distributed to luggage stores. The following operating data for the current year has been accumulated for planning purposes. Sales price $42.00 Variable cost of goods sold 14.00 Variable selling expenses 12.60 Variable administrative expenses 5.00 Annual fixed expenses Overhead $28,844,400 Selling expenses 5,731,900 Administrative expenses 12,018,500 Ivanhoe can produce 5,547,000 cases a year. The projected net income for the coming year is expected to be $6,656,400. Ivanhoe...

The following data refer to Laredo Luggage Company for the year 20x2: Sales revenue $ 1,000,000...

The following data refer to Laredo Luggage Company for the year 20x2: Sales revenue $ 1,000,000 Work-in-process inventory, December 31 30,000 Work-in-process inventory, January 1 36,000 Selling and administrative expenses 150,000 Income tax expense 80,000 Purchases of raw material 160,000 Raw-material inventory, December 31 25,000 Raw-material inventory, January 1 40,000 Direct labor 200,000 Utilities: plant 40,000 Depreciation: plant and equipment 50,000 Finished-goods inventory, December 31 50,000 Finished-goods inventory,...

The following data refer to Laredo Luggage Company for the year 20x2: Sales revenue $ 950,000...

The following data refer to Laredo Luggage Company for the year 20x2: Sales revenue $ 950,000 Work-in-process inventory, December 31 30,000 Work-in-process inventory, January 1 36,000 Selling and administrative expenses 150,000 Income tax expense 90,000 Purchases of raw material 170,000 Raw-material inventory, December 31 25,000 Raw-material inventory, January 1 20,000 Direct labor 190,000 Utilities: plant 40,000 Depreciation: plant and equipment 40,000 Finished-goods inventory, December 31 50,000 Finished-goods inventory,...

An analysis of the accounts of Crane Company reveals the following manufacturing cost data for the...

An analysis of the accounts of Crane Company reveals the following manufacturing cost data for the month ended September 30, 2020. Inventories Beginning Ending Raw materials $12,700 $10,300 Work in process 7,700 5,300 Finished goods 10,800 12,600 Costs incurred: raw materials purchases $62,300, direct labor $48,200, manufacturing overhead $26,900. The specific overhead costs were: indirect labor $6,000, factory insurance $4,900, machinery depreciation $6,400, machinery repairs $2,800, factory utilities $3,900, miscellaneous factory costs $1,770. Assume that all raw materials used were...

Aranguez Corporation produces a molded plastic casing, LX20A, for desktop computers. Summary data from its 2013...

Aranguez Corporation produces a molded plastic casing, LX20A, for desktop computers. Summary data from its 2013 income statement are as follows: Revenues $ 8,000,000 Variable costs (4,800,000) Fixed costs (3,000,000) Operating income $ 200,000 Jane Dall, Aranguez’s president, is very concerned about Aranguez Corporation’s poor profitability. She asks Giselle James, production manager, and Lester Saline, controller, to see if there are ways to reduce costs. After two weeks, James returns with a proposal to reduce variable costs to 50% of...

Plata Company produces two products: a mostly handcrafted soft leather briefcase sold under the label Maletin...

Plata Company produces two products: a mostly handcrafted soft leather briefcase sold under the label Maletin Elegant and a leather briefcase produced largely through automation and sold under the label Maletin Fina. The two products use two overhead activities, with the following costs: Setting up equipment $ 6,000 Machining 19,000 The controller has collected the expected annual prime costs for each briefcase, the machine hours, the setup hours, and the expected production. Elegant Fina Direct labor $9,000 $3,000 Direct materials...

The following are financial statements of Crane Company. Crane Company Income Statement For the Year Ended...

The following are financial statements of Crane Company. Crane Company Income Statement For the Year Ended December 31, 2022 Net sales $2,237,000 Cost of goods sold 1,019,000 Selling and administrative expenses 906,500 Interest expense 76,000 Income tax expense 69,500 Net income $ 166,000 Crane Company Balance Sheet December 31, 2022 Assets Current assets Cash $ 57,400 Debt investments 87,000 Accounts receivable (net) 169,400 Inventory 199,200 Total current assets 513,000 Plant assets (net) 573,000 Total assets $ 1,086,000 Liabilities and Stockholders’...

Crane Company has these comparative balance sheet data: CRANE COMPANY Balance Sheets December 31 2022 2021...

Crane Company has these comparative balance sheet data: CRANE COMPANY Balance Sheets December 31 2022 2021 Cash $ 27,105 $ 54,210 Accounts receivable (net) 126,490 108,420 Inventory 108,420 90,350 Plant assets (net) 361,400 325,260 $623,415 $578,240 Accounts payable $ 90,350 $ 108,420 Mortgage payable (15%) 180,700 180,700 Common stock, $10 par 252,980 216,840 Retained earnings 99,385 72,280 $623,415 $578,240 Additional information for 2022: 1. Net income was $27,900. 2. Sales on account were $382,300. Sales returns and allowances amounted to...