Cincinnati Tool Company (CTC) manufactures a line of electric garden tools that are sold in general hardware stores. The company's controller, Will Fulton, has just received the sales forecast for the coming year for CTC's three products: hedge clippers, weeders, and leaf blowers. CTC has experienced considerable variations in sales volumes and variable costs over the past two years, and Fulton belleves the forecast should be carefully evaluated from a cost-volume-profit viewpoint. The preliminary budget information for 20x2 follows: Unit sales Unit selling price Variable manufacturing cost per unit Variable selling cost per unit Weeders 50,000 $ 28 13 5 Hedge Clippers 50,000 36 $ 12 4 Leaf Blowers 100,000 48 $ 25 6 For 20x2, CTC's fixed manufacturing overhead is budgeted at $2,000,000, and the company's fixed selling and administrative expenses are forecasted to be $600,000. CTC has a tax rate of 40 percent.
Cincinnati Tool Company (CTC) manufactures a line of electric garden tools that are sold in general hardware stores. The company's controller, Will Fulton, has just received the sales forecast for the coming year for CTC's three products: hedge clippers, weeders, and leaf blowers. CTC has experienced considerable variations in sales volumes and variable costs over the past two years, and Fulton belleves the forecast should be carefully evaluated from a cost-volume-profit viewpoint. The preliminary budget information for 20x2 follows: Unit sales Unit selling price Variable manufacturing cost per unit Variable selling cost per unit Weeders 50,000 $ 28 13 5 Hedge Clippers 50,000 36 $ 12 4 Leaf Blowers 100,000 48 $ 25 6 For 20x2, CTC's fixed manufacturing overhead is budgeted at $2,000,000, and the company's fixed selling and administrative expenses are forecasted to be $600,000. CTC has a tax rate of 40 percent.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Problem 7-49 CVP; Multiple Products; Changes In Costs and Sales Mix (LO 7-4, 7-5)
[The following information applies to the questions displayed below.]
Cincinnati Tool Company (CTC) manufactures a line of electric garden tools that are sold in general hardware stores. The
company's controller, Will Fulton, has just received the sales forecast for the coming year for CTC's three products: hedge
clippers, weeders, and leaf blowers. CTC has experienced considerable variations in sales volumes and variable costs
over the past two years, and Fulton believes the forecast should be carefully evaluated from a cost-volume-profit
viewpoint. The preliminary budget Information for 20x2 follows:
Unit sales
Unit selling price
Variable manufacturing cost per unit
Variable selling cost per unit
Weeders
50,000
$
Weeders
Hedge Clippers
Leaf Blowers
Total
28
13
5
Product Line Sales
units
units
units
units
Hedge Clippers
50,000
36
$
12
4
Leaf Blowers
100,000
For 20x2, CTC's fixed manufacturing overhead is budgeted at $2,000,000, and the company's fixed selling and
administrative expenses are forecasted to be $600,000. CTC has a tax rate of 40 percent.
$ 48
25
6
Problem 7-49 Part 2
2. Assuming the sales mix remains as budgeted, determine how many units of each product CTC must sell In order to break even in
20x2. (Do not round Intermediate calculations.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F761c0ff8-bbd5-4226-81b2-8d2b76f331d7%2F2b117707-1ba8-45f0-b435-25bf49ac91b4%2F97yv1r_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required information
Problem 7-49 CVP; Multiple Products; Changes In Costs and Sales Mix (LO 7-4, 7-5)
[The following information applies to the questions displayed below.]
Cincinnati Tool Company (CTC) manufactures a line of electric garden tools that are sold in general hardware stores. The
company's controller, Will Fulton, has just received the sales forecast for the coming year for CTC's three products: hedge
clippers, weeders, and leaf blowers. CTC has experienced considerable variations in sales volumes and variable costs
over the past two years, and Fulton believes the forecast should be carefully evaluated from a cost-volume-profit
viewpoint. The preliminary budget Information for 20x2 follows:
Unit sales
Unit selling price
Variable manufacturing cost per unit
Variable selling cost per unit
Weeders
50,000
$
Weeders
Hedge Clippers
Leaf Blowers
Total
28
13
5
Product Line Sales
units
units
units
units
Hedge Clippers
50,000
36
$
12
4
Leaf Blowers
100,000
For 20x2, CTC's fixed manufacturing overhead is budgeted at $2,000,000, and the company's fixed selling and
administrative expenses are forecasted to be $600,000. CTC has a tax rate of 40 percent.
$ 48
25
6
Problem 7-49 Part 2
2. Assuming the sales mix remains as budgeted, determine how many units of each product CTC must sell In order to break even in
20x2. (Do not round Intermediate calculations.)
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