Question

Kramer Enterprises reports year-end information as follows: Sales in units: 304,000 Sales: $1,824,000 Variable Costs: 1,216,000...

  1. Kramer Enterprises reports year-end information as follows:

Sales in units: 304,000

Sales: $1,824,000

Variable Costs: 1,216,000

Contribution Margin: 608,000

Fixed Costs 494,000

Operating Income: $114,000

Kramer is developing next year’s budget. Next year, the company is planning to decrease selling prices by 10%, and as a result, expects an increase in sales volume of 15%. All other operating expenses are expected to remain constant.

Calculate Kramer’s expected operating income for next year

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Total sales = $1,824,000

Number of units sold = 304,000

Selling price per unit = Total sales / Number of units sold

= 1,824,000/304,000

= $6

Total variable cost = $1,216,000

Variable cost per unit = Total variable cost/ Number of units sold

= 1,216,000/304,000

= $4

For next year

Decrease in selling price per unit = 10%

Net selling price per unit = 6 - 6 x 10%

= 6- 0.6

= $5.4

Increase in sales = 15%

New sales = 304,000+ 304,000 x 15%

= 349,600

Income Statement
Sales (349,600 x 5.4) 1,887,840
Variable cost (349,600 x 4) -1,398,400
Contribution margin 489,440
Fixed costs -494,000
Net operating loss -$4,560

Kramer’s expected operating loss for next year -$4,560.

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
Violet Sales Corp, reports the year-end information from 2019 as follows: Sales (35,500 units) $284,000 Cost...
Violet Sales Corp, reports the year-end information from 2019 as follows: Sales (35,500 units) $284,000 Cost of goods sold 105,000 Gross margin 179,000 Operating expenses 152,000 Operating income $27,000 Violet is developing the 2019 budget. In 2019 the company would like to increase selling prices by 3.5%, and as a result expects a decrease in sales volume of 14%. All other operating expenses are expected to remain constant. Assume that cost of goods sold is a variable cost and that...
Kidd Corp. reports the following for 2021 on 100,000 unit sales: Sales $1,000,000 Variable costs 550,000...
Kidd Corp. reports the following for 2021 on 100,000 unit sales: Sales $1,000,000 Variable costs 550,000 Contribution margin 450,000 Fixed costs 300,000 Net income $ 150,000 Kidd's management is proposing a 5% price increase for 2022 ($10.00 to $10.50 per unit), and it expects the resulting weaker demand for its product to result in a 7% decrease in volume (100,000 units to 93,000 units). If the price change is adopted and the assumptions are correct, Kidd's break even point (in...
Lando Company is planning on a 20% increase in sales volume next year. This year’s sales...
Lando Company is planning on a 20% increase in sales volume next year. This year’s sales revenue is $3,435,000 and its year-end balance sheet shows total current assets of $830,000, total plant assets of $1,670,000, and total current liabilities of $450,000. The company’s dividend payout ratio is 40% and its profit margin is expected to remain steady at 14%. The company is presently operating at full capacity so it estimates that it will need to purchase $300,000 of additional plant...
The following information is available for year 1 for Dancer Components: Sales revenue (220,000 units) $...
The following information is available for year 1 for Dancer Components: Sales revenue (220,000 units) $ 6,160,000 Manufacturing cost Materials $ 363,000 Variable cash cost 308,000 Fixed cash cost 708,000 Depreciation (fixed) 2,159,000 Marketing and administrative costs Marketing (variable, cash) 913,000 Marketing depreciation 323,000 Administrative (fixed, cash) 1,099,000 Administrative depreciation 161,000 Total costs $ 6,034,000 Operating profit $ 126,000 Variable marketing costs to change with unit volume. Administrative cash cost is expected to increase by 3 percent. Inventories will be...
Profitability Analysis Kolby Enterprises reports the following information on its income statement: Net sales$220,000Administrative expenses$10,000 Cost...
Profitability Analysis Kolby Enterprises reports the following information on its income statement: Net sales$220,000Administrative expenses$10,000 Cost of goods sold140,000Other income15,000 Selling expenses40,000Other expense5,000 Required Calculate Kolby’s gross profit percentage and return on sales ratio. Kolby is planning to add a new product and expects net sales to be $30,000 and cost of goods to be $25,000. No other income or expenses are expected to change. How will this affect Kolby’s gross profit percentage and return on sales ratio? (Round all...
The following information is available for year 1 for Pepper Products:    Sales revenue (190,000 units)...
The following information is available for year 1 for Pepper Products:    Sales revenue (190,000 units) $ 3,800,000 Manufacturing costs Materials $ 224,000 Variable cash costs 190,000 Fixed cash costs 438,000 Depreciation (fixed) 1,336,000 Marketing and administrative costs Marketing (variable, cash) 565,000 Marketing depreciation 201,000 Administrative (fixed, cash) 684,000 Administrative depreciation 100,000 Total costs $ 3,738,000 Operating profits $ 62,000     All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected...
The following information is available for year 1 for Pepper Products:    Sales revenue (260,000 units)...
The following information is available for year 1 for Pepper Products:    Sales revenue (260,000 units) $ 7,020,000 Manufacturing costs Materials $ 413,000 Variable cash costs 351,000 Fixed cash costs 808,000 Depreciation (fixed) 2,464,000 Marketing and administrative costs Marketing (variable, cash) 1,041,000 Marketing depreciation 369,000 Administrative (fixed, cash) 1,255,000 Administrative depreciation 185,000 Total costs $ 6,886,000 Operating profits $ 134,000     All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected...
The following information is available for year 1 for Dancer Components: Sales revenues (210,000 units) $...
The following information is available for year 1 for Dancer Components: Sales revenues (210,000 units) $ 3,150,000 Manufacturing costs Materials $ 167,000 Variable cash costs 150,300 Fixed cash costs 322,500 Depreciation 994,000 Marketing and administrative costs Marketing (variable, cash) 426,800 Marketing depreciation 143,800 Administrative (fixed, cash) 518,600 Administrative depreciation 77,100 Total costs $ 2,800,100 Operating profits $ 349,900 All depreciation charges are fixed and are expected to remain the same for year 2. Sales volume is expected to increase by...
Conlon Enterprises reports the following information about resources. Cost Driver Rate Cost Driver Volume Resources used...
Conlon Enterprises reports the following information about resources. Cost Driver Rate Cost Driver Volume Resources used Setups $ 305 per run 360 runs Clerical 45 per page 1,200 pages typed Resources supplied Setups $ 113,650 Clerical 69,200 Sales revenue totaled $250,000. A. Prepare a traditional income statement. Traditional Income Statement Sales revenue Setup costs    Clerical costs Operating profit B. Prepare an activity-based income statement. Activity-Based Income Statement Resources Used Unused Resource Capacity Resources Supplied Sales revenue Costs Volume related...
Booth Company had sales in 2020 of $1,695,000 on 67,800 units. Variable costs totaled $1,017,000 and...
Booth Company had sales in 2020 of $1,695,000 on 67,800 units. Variable costs totaled $1,017,000 and fixed costs totaled $482,000. A new raw material is available that will decrease the variable costs per unit by 20% (or $3.00). However, to process the new raw material, fixed operating costs will increase by $115,000. Management feels that two-thirds of the decline in the variable costs per unit should be passed on to customers in the form of a sales price reduction. The...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT