Reference no: EM13536294
The Blake Manufacturing Corporation manufactures and sells folding umbrellas. The corporation's condensed income statement for the year at 31 December 2011 follows:
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Sales (200,000 units)
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£1,000,000
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Cost of goods sold
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600,000
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Gross margin
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400,000
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Selling expenses
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£150,000
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Administrative expenses
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100,000
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Net profit (before income taxes)
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£150,000
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Blake's budget committee has estimated the following changes for 2012:
30% increase in number of units sold
20% increase in material cost per unit
15% increase in direct labor cost per unit
10% increase in variable indirect cost per unit
5% increase in indirect fixed costs
8% increase in selling expenses, arising solely from increased volume
6% increase in administrative expenses, reflecting anticipated higher wage and supply price levels
Any changes in administrative expenses caused solely by increased sales volume are considered immaterial.
Because inventory qualities remain fairly constant, the budget committee considered that for budget purposes any change in inventory valuation can be ignored. The composition of the cost of a unit of finished product during 2011 for materials, direct labor and manufacturing support, respectively, was in the ratio or 3:2:1. In 2011, £40,000 of manufacturing support was for fixed costs. No changes in production methods or credit policies were contemplated for 2012.
Review this unit's readings and the above scenario.
Blake has established a budgeted target profit of £200,000. There is a debate brewing within the management ranks of Blake regarding which strategies will put the company in best position to reach that objective. Blake CEO would like to adjust prices. The sales manager would like to focus on increasing the number of units sold while maintaining current prices. Your job is to provide an analysis aimed at helping to reach a decision.
To begin this analysis:
- Compute the unit sales price at which Blake must sell its product in the current year in order to earn a budgeted target profit of £200,000.
- Calculate a value in response to the following: Unhappy about the prospect of a price increase, Blake's sales manager would like data regarding the number of units that must be sold at the former price to earn the £200,000 profit.
- Calculate a value in response to the following: Believing that an estimated increase in sales is overly optimistic, a company director is requesting data predicting annual profit if the selling price calculated above is adopted but the change in sales volume only amounts to a 10% increase.
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Compute depreciation using double-declining balance
: Compute depreciation for 2009 and 2010 using Straight line, Units of production (assume 30,000 and 60,000 units were produced in 2009 and 2010, respectively) and double-declining balance.
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Explain citrus fruits is the bitter compound limonin
: Component of citrus fruits is the bitter compound limonin, which contains only carbon, hydrogen, and oxygen. When a 1.000-gram sample of limonin is subjected to complete combustion, 2.432 grams of CO2 and 0.574 grams of H2O are produced.
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Determine what is its centripetal acceleration
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How does this affect the dollar-yen exchange rate
: How does this affect the dollar-yen exchange rate?
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Compute the unit sales price at which blake must sell
: Compute the unit sales price at which Blake must sell its product in the current year in order to earn a budgeted target profit of £200,000.
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Depict an energy diagram for a reaction that starts
: Draw an energy diagram for a reaction that starts with reactants whose energy is 20.0 kJ and has a ?H of 20.0 kJ. The activation energy for the reaction is 35.0 kj.
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What is the thrust developed by the rocket
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What is the force of friction acting on the suitcase
: You are pulling a suitcase through the airport at a constant speed. the handle of the suitcase makes an angle of 53 degrees with respect to the horizontal direction. what is the force of friction acting on the suitcase
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Explain pass of ethene through the reaction chamber
: In the first pass of ethene through the reaction chamber ,the actual rate of production of ethanol ia 271 g/min. what is the percent yield for the reaction
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