Prepare budgeted income statements

Assignment Help Financial Accounting

Reference no: EM13172104

Problem

Santana Rey expects second quarter 2012 sales of her new line of computer furniture to be the same as the first quarter sales (reported below) without any changes in strategy. Monthly sales averaged 40 desk units (sales price of $1,250) and 20 chairs (sales price of $500).

1056_Budgeted income statements for each of the months.png

Santana Rey believes that sales will increase each month for the next three months (April - 48 desks, 32 chairs: May - 52 desks, 35 chairs: June - 56 desks, 38 chairs) if selling prices are reduced to $1,150 for desks and $450 for chairs, and advertising expenses are increased by 10% and remain at that level for all three months. The products' variable cost will remain at $750 for desks and $250 for chairs. The sales staff will continue to earn a 10% commission, the fixed manufacturing costs per month will remain at $10,000 and other fixed expenses will remain at $6,000 per month.

Questions:

1. Prepare budgeted income statements for each of the months of April, May, and June that show the expected results from implementing the proposed changes. Use a three-column format, with one column for each month.

2. Use the budgeted income statements from part 1 to recommend whether Santana Rey should implement the proposed changes. Explain.

Reference no: EM13172104

Questions Cloud

Prepare income statements for both years : Required: Prepare income statements for both years using both absorption and variable costing methods.

Compute the payback period and accounting rate of return : Compute the (1) payback period and (2) accounting rate of return for this equipment. (Record answers as percents, rounded to one decimal.)

Find the mass of barium metal : find the mass of barium metal(in grams) that must react with O_2 to produce enough barium oxide to prepare 1.0L of a 0.10M solution of OH^-

Prepare budgeted income statements : Prepare budgeted income statements for each of the months of April, May, and June that show the expected results from implementing the proposed changes. Use a three-column format, with one column for each month.

How many joules of heat energy must be supplied : A home swimming pool contains 145 m3 of water. At the beginning of the swimming season, the water must be heated from 18 to 31°C. How many joules of heat energy must be supplied?

What is the total cost of job : What is the total cost of Job 6.15 if Business Solutions applies overhead at 50% of direct labor cost and what is the total cost of job 6.15 is Business Solutions uses activity based costing?

Compute the mass of pure water recovered per mass of water : Calculate the mass of pure water recovered per mass of water in the process feed. A.3) Calculate the weight percent of salt leaving the 5th evaporator. (Note: Thoughtful selection of control volume can save you a lot of algebra.)

What is the cost of the raw materials : What is the cost of the raw materials used in June for each of the three jobs and in total and how much total direct labor cost is incurred in June?

User Account

All Pages