Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
16th Edition
ISBN: 9780134475585
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 6, Problem 6.21E
Sales budget, service setting. In 2017 Hart & Sons, a small environmental-testing firm, performed 11,400 radon tests for $260 each and 15,000 lead tests for $210 each. Because newer homes are being built with lead-free pipes, lead-testing volume is expected to decrease by 12% next year. However, awareness of radon-related health hazards is expected to result in a 5% increase in radon-test volume each year in the near future. Jim Hart feels that if he lowers his price for lead testing to $200 per test, he will have to face only a 4% decline in lead-test sales in 2018.
- 1. Prepare a 2018 sales budget for Hart & Sons assuming that Hart holds prices at 2017 levels.
- 2. Prepare a 2018 sales budget for Hart & Sons assuming that Hart lowers the price of a lead test to $200. Should Hart lower the price of a lead test in 2018 if the company’s goal is to maximize sales revenue?
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In 2017, Cole & Sons, a small environmental-testing firm, performed 11,200 radon tests for $290 each and 15,800 lead tests for $240 each. Because newer homes are being built with lead-free pipes, lead-testing volume is expected to decrease by 12% next year. However, awareness of radon-related health hazards is expected to result in a 4% increase in radon-test volume each year in the near future. Jim Cole feels that if he lowers his price for lead testing to $230 per test, he will have to face only an 7% decline in lead-test sales in 2018.
Requirements
1.
Prepare a
2018
sales budget for
Cole
& Sons assuming that
Cole
holds prices at
2017
levels.
2.
Prepare a
2018
sales budget for
Cole
& Sons assuming that
Cole
lowers the price of a lead test to
$230.
Should
Cole
lower the price of a lead test in
2018
if the company's goal is to maximize sales revenue?
In 2017, Cole & Sons, a small environmental-testing firm, performed 12,200 radon tests for $300 each and 16,000 lead tests for $230 each. Because newer homes are being built with lead-free pipes, lead-testing volume is expected to decrease by 12% next
year. However, awareness of radon-related health hazards is expected to result in a 5% increase in radon-test volume each year in the near future. Jim Cole feels that if he lowers his price for lead testing to $210 per test, he will have to face only a 4% decline
in lead-test sales in 2018.
Read the requirements
Requirement 1. Prepare the sales budget for Cole & Sons assuming that prices are held at 2017 levels.
Sales Budget
For the Year Ended December 31, 2018
Requirements
Selling price
Units sold in 2018
Total revenues
Radon tests
300
12810
3843000
230
3238400
1. Prepare a 2018 sales budget for Cole & Sons assuming that Cole holds prices
at 2017 levels.
Lead tests
14080
7080400
2. Prepare a 2018 sales budget for Cole & Sons assuming…
Thomasville Furniture Industries offers several types of high-performance fabrics that are capable of withstanding chemicals as harsh as chlorine. A Midwestern manufacturing company that uses fabric in several products has a report showing that the present worth of fabric purchases over a specified 5-year period was $900,000. If the costs are known to have increased geometrically by 5% per year during that time and the company uses an interest rate of 15% per year for investments, what was the cost of the fabric in year 1?
Chapter 6 Solutions
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
Ch. 6 - What are the four elements of the budgeting cycle?Ch. 6 - Define master budget.Ch. 6 - Strategy, plans, and budgets are unrelated to ore...Ch. 6 - Budgeted performance is a better criterion than...Ch. 6 - Production managers and marketing managers are...Ch. 6 - Budgets meet the cost-benefit test. They force...Ch. 6 - Define rolling budget. Give an example.Ch. 6 - Outline the steps in preparing an operating...Ch. 6 - The sales forecast is the cornerstone for...Ch. 6 - Prob. 6.10Q
Ch. 6 - Define Kaizen budgeting.Ch. 6 - Prob. 6.12QCh. 6 - Explain how the choice of the type of...Ch. 6 - What are some additional considerations that arise...Ch. 6 - Prob. 6.15QCh. 6 - Master budget. Which of the following statements...Ch. 6 - Operating and financial budgets. Which of the...Ch. 6 - Production budget. Superior Industries sales...Ch. 6 - Responsibility centers. Elmhurst Corporation is...Ch. 6 - Cash budget. Mary Jacobs, the controller of the...Ch. 6 - Sales budget, service setting. In 2017 Hart Sons,...Ch. 6 - Sales and production budget. The Coby Company...Ch. 6 - Direct material budget. Dawson Co. produces wine....Ch. 6 - Material purchases budget. The McGrath Company has...Ch. 6 - Revenues, production, and purchases budgets. The...Ch. 6 - Revenues and production budget. Saphire, Inc.,...Ch. 6 - Budgeting; direct material usage, manufacturing...Ch. 6 - Budgeting, service company. Ever Clean Company...Ch. 6 - Budgets for production and direct manufacturing...Ch. 6 - Activity-based budgeting. The Jerico store of...Ch. 6 - Kaizen approach to activity-based budgeting...Ch. 6 - Responsibility and controllability. Consider each...Ch. 6 - Responsibility, controllability, and stretch...Ch. 6 - Cash flow analysis, sensitivity analysis....Ch. 6 - Budget schedules for a manufacturer. Hale...Ch. 6 - Budgeted costs, Kaizen improvements environmental...Ch. 6 - Revenue and production budgets. (CPA, adapted) The...Ch. 6 - Budgeted income statement. (CMA, adapted) Smart...Ch. 6 - Prob. 6.39PCh. 6 - Comprehensive problem with ABC costing. Animal...Ch. 6 - Cash budget (continuation of 6-40). Refer to the...Ch. 6 - Comprehensive operating budget. Skulas, Inc.,...Ch. 6 - Cash budgeting, budgeted balance sheet....Ch. 6 - Comprehensive problem; ABC manufacturing, two...Ch. 6 - Cash budget. (Continuation of 6-44) (Appendix)...Ch. 6 - Budgeting and ethics. Jayzee Company manufactures...Ch. 6 - Kaizen budgeting for carbon emissions. Apex...Ch. 6 - Comprehensive budgeting problem; activity-based...
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