Question

Santana Rey expects second-quarter 2020 sales of Business Solutions’s line of computer furniture to be the...

Santana Rey expects second-quarter 2020 sales of Business Solutions’s line of computer furniture to be the same as the first quarter’s 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).

BUSINESS SOLUTIONS—Computer Furniture Segment
Segment Income Statement*
For Quarter Ended March 31, 2020
Sales† $ 180,000
Cost of goods sold‡ 135,000
Gross profit 45,000
Expenses
Sales commissions (10%) 18,000
Advertising expenses 9,000
Other fixed expenses 18,000
Total expenses 45,000
Net income $ 0

* Reflects revenue and expense activity only related to the computer furniture segment.
† Revenue: (120 desks × $1,250) + (60 chairs × $500) = $150,000 + $30,000 = $180,000
‡ Cost of goods sold: (120 desks × $750) + (60 chairs × $250) + $30,000 = $135,000

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.

Required:
1. Prepare budgeted income statements for the computer furniture segment 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. Recommend whether Santana Rey should implement the proposed changes.

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Budgeted income statements
for the month of april may june
april may june
Revenue (A) 69600 75550 81500
48*1150+32*450 52*1150+35*450 56*1150+38*450
cost of goods sold (B) 54000 57750 61500
48*750+32*250+10000 52*750+35*250+10000 56*750+38*250+10000
Gross profit (A)-(B) 15600 17800 20000
expenses:
sale commission (A)*10% 6960 7555 8150
advertising expenses 3300 3300 3300
other fixed expenses 6000 6000 6000
Total fixed expenses 16260 16855 17450
Net income -660 945 2550
2) Should not implement proposed changes

Advertising expenses = 9000/3*1.10

Please give a thumbs up if it is helpful & let me know if any doubt

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Santana Rey expects second-quarter 2018 sales of her new line of computer furniture to be the...
Santana Rey expects second-quarter 2018 sales of her new line of computer furniture to be the same as the first quarter’s sales (reported below) without any changes in strategy. Monthly sales averaged 42 desk units (sales price of $1,270) and 22 chairs (sales price of $520). Sales $194,340 COGS 145,440 Gross profit 48,900 Expenses Sales commissions (10%) 19,434 Advertising expenses 9,600 Other fixed expenses 18,600 Total expenses 47,634 Net income 1,266 * Reflects revenue and expense activity only related to...
Santana Rey expects sales of Business Solutions’s line of computer workstation furniture to equal 300 workstations...
Santana Rey expects sales of Business Solutions’s line of computer workstation furniture to equal 300 workstations (at a sales price of $3,100 each) for 2019. The workstations’ manufacturing costs include the following. Direct materials $ 790 per unit Direct labor $ 380 per unit Variable overhead $ 60 per unit Fixed overhead $ 19,200 per year The selling expenses related to these workstations follow. Variable selling expenses $ 30 per unit Fixed selling expenses $ 3,100 per year Santana is...
Santana Rey has found that Business Solutions’s line of computer desks and chairs has become very...
Santana Rey has found that Business Solutions’s line of computer desks and chairs has become very popular, and she is finding it hard to keep up with demand. She knows that she cannot fill all of her orders for both items, so she decides she must determine the optimal sales mix given the resources she has available. Information about the desks and chairs follows. Desks Chairs Selling price per unit $ 1,102.50 $ 324.00 Variable costs per unit 470.00 130.00...
Santana Rey has found that Business Solutions’s line of computer desks and chairs has become very...
Santana Rey has found that Business Solutions’s line of computer desks and chairs has become very popular, and she is finding it hard to keep up with demand. She knows that she cannot fill all of her orders for both items, so she decides she must determine the optimal sales mix given the resources she has available. Information about the desks and chairs follows. Desks Chairs Selling price per unit $ 1,554.00 $ 622.00 Variable costs per unit 440.00 230.00...
Santana Rey has found that Business Solutions’s line of computer desks and chairs has become very...
Santana Rey has found that Business Solutions’s line of computer desks and chairs has become very popular, and she is finding it hard to keep up with demand. She knows that she cannot fill all of her orders for both items, so she decides she must determine the optimal sales mix given the resources she has available. Information about the desks and chairs follows. Desks Chairs Selling price per unit $ 1,131.25 $ 491.00 Variable costs per unit 440.00 280.00...
1. Santana Rey expects sales of Business Solutions’s line of computer workstation furniture to equal 300...
1. Santana Rey expects sales of Business Solutions’s line of computer workstation furniture to equal 300 workstations (at a sales price of $3,900 each) for 2018. The workstations’ manufacturing costs include the following. Direct materials $ 720 per unit Direct labor $ 390 per unit Variable overhead $ 100 per unit Fixed overhead $ 19,200 per year The selling expenses related to these workstations follow. Variable selling expenses $ 40 per unit Fixed selling expenses $ 3,700 per year Santana...
The chapter 22 team discussion problem is presented below. If your team has three members, complete...
The chapter 22 team discussion problem is presented below. If your team has three members, complete part 1 only; each team member should prepare a budgeted income statement for a different month (April, May, or June). If your team has four members, complete parts 1 and 2; the first three team members will complete part 1 (April, May, and June, respectively), and the fourth team member will complete part 2. The problem is reproduced below. For full credit on part...
Business Solutions's second-quarter 2020 fixed budget performance report for its computer furniture operations follows. The $171,060...
Business Solutions's second-quarter 2020 fixed budget performance report for its computer furniture operations follows. The $171,060 budgeted expenses include $117,260 in variable expenses for desks and $19,800 in variable expenses for chairs, as well as $34,000 fixed expenses. The actual expenses include $35,600 fixed expenses. List fixed and variable expenses separately. Fixed Budget Actual Results Variances Desk sales (in units) 143 149 Chair sales (in units) 66 74 Desk sales $ 178,750 $ 184,760 $ 6,010 F Chair sales 38,280...
Success Systems’ second quarter 2014 fixed budget performance report for its computer furniture operations follows. The...
Success Systems’ second quarter 2014 fixed budget performance report for its computer furniture operations follows. The $159,690 budgeted expenses include $106,400 in variable expenses for desks and $18,290 in variable expenses for chairs, as well as $35,000 fixed expenses. The actual expenses include $36,500 fixed expenses. List fixed and variable expenses separately. Fixed Budget Actual Results Variances   Desk sales (in units) 140       146         Chair sales (in units) 59       67         Desk sales (in dollars) $ 189,000      ...
Business Solutions's second-quarter 2018 fixed budget performance report for its computer furniture operations follows. The $171,510...
Business Solutions's second-quarter 2018 fixed budget performance report for its computer furniture operations follows. The $171,510 budgeted expenses include $122,310 in variable expenses for desks and $16,200 in variable expenses for chairs, as well as $33,000 fixed expenses. The actual expenses include $34,300 fixed expenses. List fixed and variable expenses separately. Fixed Budget Actual Results Variances Desk sales (in units) 151 157 Chair sales (in units) 60 68 Desk sales $ 197,810 $ 204,100 $ 6,290 F Chair sales 30,600...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT