Question

In: Accounting

as follows: Sales (160,000 units) $960,000 Cost of goods sold

as follows:

Sales (160,000 units) $960,000

Cost of goods sold 640,000

Gross margin 320,000

Operating expenses 260,000

Operating income $60,000

Kramer is developing the 2016 budget. In 2016 the company would like to increase selling prices by 12.5%, and as a result expects a decrease in sales volume of 10%. All other operating expenses are expected to remain constant. Assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost.

a) What is budgeted sales for 2016? $ _________

b) What is budgeted cost of goods sold for 2016? $___________

Expert Solution

(a) Calculaltion of budgeted sales for 2016 is as follows:

Budgeted sales = Budgeted selling units * Budgeted Selling price per unit

= 144,000 units * $ 6.75 per unit

= $ 972,000

Thus, budgeted sales for 2016 is $ 972,000

Working note:

1. Calculation of Budgeted selling units is as follows:

Expects a decrease in sales volume of 10%

Budgeted selling units = Current selling units - ( 10% of current selling unit)

160,000 units - ( 10% of 160,000 )

= 160,000 units - 16,000 units

= 144,000 units

2. Calculation of Budgeted Selling price per unit is as follows:

Budgeted Selling price per unit = Current selling price per unit + ( 12.5% of current selling price per unit )

= $ 6 per unit + ( 12.5% of $ 6 )

= $ 6 per unit + $ 0.75 per unit

= $ 6.75 per unit

Current selling price per unit = Sales / Selling units

= $ 960,000 / 160,000

= $ 6 per unit

(b) Calculation of budgeted cost of goods sold for 2016 is as follows:

Budgeted cost of goods sold = Budgeted Selling units * Cost of goods sold per unit

= 144,000 units * $ 4 per unit

= $ 576,000

Thus, budgeted cost of goods sold for 2016 is $ 576,000.

Working note:

1. Budgeted Selling units (refer working note 1 of answer a )

2.Calculation of Cost of goods sold per unit is as follows:

There is no change in Cost of goods sold per unit thus:

Cost of goods sold per unit = Cost of goods sold / Selling units

= $ 640,000 / 160,000

= $ 4 per unit

ekkarill92 answered 1 year ago

Details of CPA Company are as follows: Sales 5,000,000 Cost of Goods Sold &

Details of CPA Company are as follows: Sales 5,000,000 Cost of Goods Sold 2,000,000 Interest Income reported 5,000 Operating Expense per PFRS 1,500,000 Warranty Expense 250,000 Actual Warranty Paid 200,000 Depreciation Expense per PFRS 200,000 Depreciation Expense per BIR 150,000 Doubtful Accounts 100,000 Accounting Income 400,000 Tax Rate 30% 1. How much is the Income Tax Expense of CPA Company? 2. How much is the Income Tax Payable (Current Tax Expense) of CPA Company? 3. Statement I : Future Taxable Difference is a Permanent Difference...

Joyner Company’s income statement for Year 2 follows: Sales $ 714,000 Cost of goods sold ...

Joyner Company’s income statement for Year 2 follows: Sales $ 714,000 Cost of goods sold 207,000 Gross margin 507,000 Selling and administrative expenses 217,000 Net operating income 290,000 Nonoperating items: Gain on sale of equipment 7,000 Income before taxes 297,000 Income taxes 89,100 Net income $ 207,900 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets ...

Sales (16,000 units × $211 per unit) $ 3,376,000 Cost of goods sold Direct materials $...

Sales (16,000 units × $211 per unit) $ 3,376,000 Cost of goods sold Direct materials $ 400,000 Direct labor 688,000 Production supplies 448,000 Plant manager salary 200,000 1,736,000 Gross profit 1,640,000 Selling expenses Sales commissions 128,000 Packaging 256,000 Advertising 100,000 484,000 Administrative expenses Administrative salaries 250,000 Depreciation—office equip. 220,000 Insurance 190,000 Office rent 200,000 860,000 Income from operations $ 296,000 (1) Compute the total variable cost per unit. (2) Compute the total fixed costs. (3) Compute the income from operations...

Joyner Company’s income statement for Year 2 follows: Sales $ 708,000 Cost of goods sold 387,000...

Joyner Company’s income statement for Year 2 follows: Sales $ 708,000 Cost of goods sold 387,000 Gross margin 321,000 Selling and administrative expenses 151,100 Net operating income 169,900 Nonoperating items: Gain on sale of equipment 8,000 Income before taxes 177,900 Income taxes 53,370 Net income $ 124,530 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash and cash equivalents $ 97,030 $ 80,700 Accounts receivable 228,000 132,000 Inventory...

Joyner Company’s income statement for Year 2 follows: Sales $ 719,000 Cost of goods sold 100,000...

Joyner Company’s income statement for Year 2 follows: Sales $ 719,000 Cost of goods sold 100,000 Gross margin 619,000 Selling and administrative expenses 150,600 Net operating income 468,400 Nonoperating items: Gain on sale of equipment 9,000 Income before taxes 477,400 Income taxes 143,220 Net income $ 334,180 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash and cash equivalents $ 303,780 $ 92,100 Accounts receivable 221,000 116,000 Inventory...

Joyner Company’s income statement for Year 2 follows: Sales $ 718,000 Cost of goods sold 327,000...

Joyner Company’s income statement for Year 2 follows: Sales $ 718,000 Cost of goods sold 327,000 Gross margin 391,000 Selling and administrative expenses 218,000 Net operating income 173,000 Nonoperating items: Gain on sale of equipment 9,000 Income before taxes 182,000 Income taxes 72,800 Net income $ 109,200 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash $ 53,400 $ 55,500 Accounts receivable 256,000 135,000 Inventory 319,000 284,000 Prepaid...

oyner Company’s income statement for Year 2 follows: Sales $ 718,000 Cost of goods sold 50,000...

oyner Company’s income statement for Year 2 follows: Sales $ 718,000 Cost of goods sold 50,000 Gross margin 668,000 Selling and administrative expenses 217,000 Net operating income 451,000 Nonoperating items: Gain on sale of equipment 5,000 Income before taxes 456,000 Income taxes 136,800 Net income $ 319,200 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash $ 254,300 $ 55,900 Accounts receivable 252,000 118,000 Inventory 318,000 286,000 Prepaid...

Joyner Company’s income statement for Year 2 follows: Sales $ 714,000 Cost of goods sold 303,000...

Joyner Company’s income statement for Year 2 follows: Sales $ 714,000 Cost of goods sold 303,000 Gross margin 411,000 Selling and administrative expenses 217,000 Net operating income 194,000 Nonoperating items: Gain on sale of equipment 7,000 Income before taxes 201,000 Income taxes 80,400 Net income $ 120,600 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash $ 65,800 $ 87,600 Accounts receivable 253,000 118,000 Inventory 320,000 274,000 Prepaid...

Joyner Company’s income statement for Year 2 follows: Sales $ 718,000 Cost of goods sold 310,000...

Joyner Company’s income statement for Year 2 follows: Sales $ 718,000 Cost of goods sold 310,000 Gross margin 408,000 Selling and administrative expenses 218,000 Net operating income 190,000 Nonoperating items: Gain on sale of equipment 8,000 Income before taxes 198,000 Income taxes 59,400 Net income $ 138,600 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash $ 81,000 $ 84,700 Accounts receivable 257,000 114,000 Inventory 319,000 283,000 Prepaid...

Joyner Company’s income statement for Year 2 follows: Sales $ 717,000 Cost of goods sold 208,000...

Joyner Company’s income statement for Year 2 follows: Sales $ 717,000 Cost of goods sold 208,000 Gross margin 509,000 Selling and administrative expenses 150,800 Net operating income 358,200 Nonoperating items: Gain on sale of equipment 10,000 Income before taxes 368,200 Income taxes 110,460 Net income $ 257,740 Its balance sheet amounts at the end of Years 1 and 2 are as follows: Year 2 Year 1 Assets Cash and cash equivalents $ 234,640 $ 52,500 Accounts receivable 229,000 150,000 Inventory...