Reference no: EM132601239

Problem 1: How do calculate what the budgeted sales will be?

Brent Enterprises reports the year-end information from 2011 as follows:

Sales (35,000 units)           $280,000

Cost of goods sold            105,000

Gross margin                  175,000

Operating expenses         100,000

Operating income          $ 75,000

Problem 2: Brent is developing the 2012 budget. In 2012 the company would like to increase selling prices by 4%, and as a result expects a decrease in sales volume of 10%. All other operating expenses are expected to remain constant. Assume that COGS is a variable cost and that operating expenses are a fixed cost. What are budgeted sales for 2012?

Option 1: $252,000

Option 2: $262,080

Option 3: $291,200

Option 4: $280,000