Here are data regarding Flamingo Company's budget for the month of January: Break-even point in sales revenue Variable expense percentage Margin of safety, as a percentage of budgeted sales What is Flamingo's budgeted operating income in January? $103,750 O $131,250 O $137,500 O $162,500 O None of the above $125,000 30% 60%

Here are data regarding Flamingo Company's budget for the month of January: Break-even point in sales revenue Variable expense percentage Margin of safety, as a percentage of budgeted sales What is Flamingo's budgeted operating income in January? $103,750 O $131,250 O $137,500 O $162,500 O None of the above $125,000 30% 60%

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter8: Budgeting For Planning And Control

Section: Chapter Questions

Problem 34E: A companys sales for the coming months are as follows: About 20 percent of sales are cash sales, and...

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Sales Revenue Approach, Variable Cost Ratio, Contribution Margin Ratio Arberg Companys controller prepared the following budgeted income statement for the coming year: Required: 1. What is Arbergs variable cost ratio? What is its contribution margin ratio? 2. Suppose Arbergs actual revenues are 30,000 more than budgeted. By how much will operating income increase? Give the answer without preparing a new income statement 3. How much sales revenue must Arberg earn to break even? Prepare a contribution margin income statement to verify the accuracy of your answer. 4. What is Arbergs expected margin of safety? 5. What is Arbergs margin of safety if sales revenue is 380,000?
Operating Budget, Comprehensive Analysis Allison Manufacturing produces a subassembly used in the production of jet aircraft engines. The assembly is sold to engine manufacturers and aircraft maintenance facilities. Projected sales in units for the coming 5 months follow: The following data pertain to production policies and manufacturing specifications followed by Allison Manufacturing: a. Finished goods inventory on January 1 is 32,000 units, each costing 166.06. The desired ending inventory for each month is 80% of the next months sales. b. The data on materials used are as follows: Inventory policy dictates that sufficient materials be on hand at the end of the month to produce 50% of the next months production needs. This is exactly the amount of material on hand on December 31 of the prior year. c. The direct labor used per unit of output is 3 hours. The average direct labor cost per hour is 14.25. d. Overhead each month is estimated using a flexible budget formula. (Note: Activity is measured in direct labor hours.) e. Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Note: Activity is measured in units sold.) f. The unit selling price of the subassembly is 205. g. All sales and purchases are for cash. The cash balance on January 1 equals 400,000. The firm requires a minimum ending balance of 50,000. If the firm develops a cash shortage by the end of the month, sufficient cash is borrowed to cover the shortage. Any cash borrowed is repaid at the end of the quarter, as is the interest due (cash borrowed at the end of the quarter is repaid at the end of the following quarter). The interest rate is 12% per annum. No money is owed at the beginning of January. Required: 1. Prepare a monthly operating budget for the first quarter with the following schedules. (Note: Assume that there is no change in work-in-process inventories.) a. Sales budget b. Production budget c. Direct materials purchases budget d. Direct labor budget e. Overhead budget f. Selling and administrative expenses budget g. Ending finished goods inventory budget h. Cost of goods sold budget i. Budgeted income statement j. Cash budget 2. CONCEPTUAL CONNECTION Form a group with two or three other students. Locate a manufacturing plant in your community that has headquarters elsewhere. Interview the controller for the plant regarding the master budgeting process. Ask when the process starts each year, what schedules and budgets are prepared at the plant level, how the controller forecasts the amounts, and how those schedules and budgets fit in with the overall corporate budget. Is the budgetary process participative? Also, find out how budgets are used for performance analysis. Write a summary of the interview.
Q2: The following monthly budgeted data are available for a wholesale company: Product Product Product A B с $800,000 $400,000 $200,000 640,000 240,000 140,000 $160,000 $160,000 $60,000 Sales Variable expenses Contribution margin The budgeted total fixed expense is $ 150,000. Required: a) Calculate the break-even sales for the month? b) Calculate the margin of safety in sales dollars? c) What is the sales Mix?
Veritas Ltd provides the following budget information for July: Selling price $25 Variable costs per unit $16 Fixed costs $47,438 Volume of sales 11,125 units Required Calculate the budgeted profit or loss for the month. Designate any loss calculated by preceding your answer with a negative sign.
Mirabel Manufacturing Budgeted Income Statement For the Year Ending December 31 Sales Cost of goods sold: Gross Margin Selling & Administrative Net Operating Income Normal Annual Sales Volume Unit Selling Price Variable expense per unit Variable Fixed Commissions Fixed Marketing Expenses Fixed Administrative Model 101 16,000 $ 650 $250 (Note: Each of the following questions is independent of the others) 1. What is Mirabel's over-all break-even point in sales dollars? $ 13,300,000 $ 9,300,000 $ 4,410,000 $ 1,350,000 $ 6,000,000 $ 2,390,000 Model 201 19,000 $750 $ 200 $ 36,750,000 $ 14,150,000 Model 301 11,000 $ 1,100 $ 500
Prowse Corporation is an oil well service company that measures its output by the number of wells serviced. The company has provided the following fixed and variable cost estimates that it uses for budgeting purposes. Fixed Element Variable Element per Well per Month Serviced Revenue $4,000 $1,000 Employee salaries and wages Servicing materials other expenses $43,800 $ 600 $38,200 A total of 42 wells were actually serviced during October. The revenue in the company's flexible budget for October would have been closest to:
Break-Even in Sales Revenue, Changes in Variables Carmichael Corporation is in the process of preparing next year's budget. The pro forma income statement for the current year is as follows: $1,800,000 Sales Cost of sales: Direct materials Direct labor Variable overhead Fixed overhead Gross profit Selling and administrative expenses: Variable Fixed Operating income Required: $250,000 180,000 106,000 100,000 $400,000 350,000 636,000 $1,164,000 750,000 $414,000 1. What is the break-even sales revenue for Carmichael Corporation for the current year? In your calculations, carry the contribution margin ratio to two decimal places. $ 937,500 2. For the coming year, the management of Carmichael Corporation anticipates an 8 percent increase in variable costs and a $60,000 increase in fixed expenses. What is the break-even point in dollars for next year? In your computation, round the contribution margin ratio to four decimal places. Round your final answer to the nearest dollar. (CMA adapted)
Assume a manufacturing company provides the following information from its master budget for the month of May: Unit sales 6,100 Selling price per unit $ 50 Direct materials cost per unit $ 18 Direct labor cost per unit $ 15 Predetermined overheard rate (based on direct labor dollars) 80% If the company maintains no beginning or ending inventories, what is the budgeted gross margin for May?
Required information [The following information applies to the questions displayed below.] A company provided the following fixed and variable cost estimates that it uses for budgeting purposes and the actual results for April as shown below: Fixed Actual Variable Element per Customer Served 5,900 Element Total for April $ 216,500 per Month Revenue Employee salaries and $ 66,000 $ 116,200 $ 19,700 $ 42,500 1,300 wages Travel expenses Other expenses 580 $ 45,000 When preparing its planning budget the company estimated that it would serve 35 customers per month; however, during April the company actually served 40 customers. 3. Calculate the amount of net income the company will report in the April flexible budget. Net operating income
Assume a company's sales budget for July estimates 15,000 units sold. The variable selling and administrative expense used for budgeting purposes is $4.00 per unit sold. The total budgeted fixed selling and administrative expense for July is $80,000 including depreciation of $15,000. What is the total budgeted selling and administrative expense for July? Multiple Choice $120,000 $155,000 $125,000 $140,000
Preparing a Budgeted Income Statement Oliver Company provided the following information for the coming year: Units produced and sold 160,000 Cost of goods sold per unit $6.30 Selling price $14 Variable selling and administrative expenses per unit $1.10 Fixed selling and administrative expenses $423,000 Tax rate 28 % Required: Prepare a budgeted income statement for Oliver Company for the coming year. Round all income statement amounts to the nearest dollar. Oliver Company Budgeted Income Statement For the Coming Year Sales v Cost of goods sold v Gross margin Less: Variable selling and administrative expenses v Less: Fixed selling and administrative expenses Operating income v Less: Income taxes Net income v %24
Flexible budget for selling and administrative expenses for a service company Digital Solutions Inc. uses flexible budgets that are based on the following data: Sales commissions 10% of sales Advertising expense 14% of sales Miscellaneous administrative expense $9,500 per month plus 3% of sales Office salaries expense $49,000 per month Customer support expenses $25,000 per month plus 31% of sales Research and development expense $74,000 per month This information has been collected in the Microsoft Excel Online file. Open the spreadsheet, perform the required analysis, and input your answers in the question below. X Open spreadsheet Prepare a flexible selling and administrative expenses budget for October for sales volumes of $400,000, $700,000, and $1,200,000. (Use Exhibit 5 as a model.) Enter all amounts as positive numbers.