Question

In: Accounting

16. Assume that June’s production budget showed required production of 438,000 units, desired ending finished goods...

16.

Assume that June’s production budget showed required production of 438,000 units, desired ending finished goods inventory of 29,000 units, and beginning finished goods inventory 12,500 units. What were June’s budgeted unit sales?

Multiple Choice

454,500 units
421,500 units
472,250 units
414,250 units

18.

Assume the following information:

	Amount		Per Unit
Sales	$	600,000	$	40
Contribution margin	$	360,000	$	24
Net operating income	$	240,000

If the selling price per unit increases by 10% and unit sales drop by 7%, then the best of estimate of the new net operating income is:

Multiple Choice

$240,600.
$250,600.
$260,600.
$270,600.

Solutions

Expert Solution

16.

Production = 438,000 units

Ending inventory of finished goods = 29,000 units

Beginning inventory of finished goods = 12,500 units

Sales = ?

Sales = Beginning inventory of finished goods + Production -Ending inventory of finished goods

= 12,500+438,000-29,000

= 421,500 units

June’s budgeted unit sales 421,500 units

Second option is correct.

18.

Selling price per unit increases by 10%

Selling price per unit = $40

New selling price = 40+ 40 x10%

= 40+4

= $44

Units sales drop by 7%

Units sales = Total sales/ Selling price per unit

= 600,000/40

= 15,000

New units sales = 15,000- 15,000 x 7%

= 15,000-1,050

= 13,950

Fixed cost = Contribution margin - Net operating income

= 360,000-240,000

= $120,000

Variable cost per unit = Selling price per unit - Contribution margin per unit

= 40-24

= $16

Income Statement
	Amout	Per unit
Sales (13,950 units)	613,800	44
Variable costs (13,950 units))	-223,200	-16
Contribution margin	390,600	28
Fixed costs	-120,000
Net operating income	$270,600

the new net operating income is = $270,600

Fourth option is correct.

Kindly comment if you need further assistance. Thanks

ekkarill92 answered 1 year ago

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