In 2020, Rouse & Sons, a small environmental-testing firm, performed 11,200 radon tests for $280 each and 15,000 load tests for $190 each. Because newer homes are being built with lead-freepipes, lead-testing volume is expected to decrease by 9% next year. However, awareness of radon-related health hazards is expected to result in a 4% increase in radon-test volume each year in the near future.Jim Rouse feels that if he lowers his price for lead testing to $170 per test, he will have to face only a 6% decline in lead-test sales in 2021.Read the requirementsUnits sold in 2021Selling priceRadon tests11,648Lead tests13,650Total revenues280 $ 3.261,4401902,593,5005,854,940TotalCRequirementsRequirement 2. Prepare the sales budget assuming that Rouse lowers the price of a load test to $170.Sales BudgetFor the Year Ended December 31, 20211. Prepare a 2021 sales budget for Rouse & Sons assuming that Rouse holdsprices at 2020 levels.2. Prepare a 2021 sales budget for Rouse & Sons assuming that Rouse lowersthe price of a lead test to $170. Should Rouse lower the price of a lead test in2021 if the company's goal is to maximize sales revenue?Radon testsLoad testsTotalTotal revenuesPrintDone

Answer 1. We need to adjust the expected volume of tests based on the projected changes for radon…

Answered: In 2020, Rouse & Sons, a small…

Excel Applications for Accounting Principles

4th Edition

ISBN:9781111581565

Author:Gaylord N. Smith

Publisher:Gaylord N. Smith

Chapter26: Capital Budgeting (capbud)

Section: Chapter Questions

Problem 5R

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In 2017, Cole & Sons, a small environmental-testing firm, performed 12,200 radon tests for $300 each and 16,000 lead tests for $230 each. Because newer homes are being built with lead-free pipes, lead-testing volume is expected to decrease by 12% next year. However, awareness of radon-related health hazards is expected to result in a 5% increase in radon-test volume each year in the near future. Jim Cole feels that if he lowers his price for lead testing to $210 per test, he will have to face only a 4% decline in lead-test sales in 2018. Read the requirements Requirement 1. Prepare the sales budget for Cole & Sons assuming that prices are held at 2017 levels. Sales Budget For the Year Ended December 31, 2018 Requirements Selling price Units sold in 2018 Total revenues Radon tests 300 12810 3843000 230 3238400 1. Prepare a 2018 sales budget for Cole & Sons assuming that Cole holds prices at 2017 levels. Lead tests 14080 7080400 2. Prepare a 2018 sales budget for Cole & Sons assuming…
In 2017, Cole & Sons, a small environmental-testing firm, performed 11,200 radon tests for $290 each and 15,800 lead tests for $240 each. Because newer homes are being built with lead-free pipes, lead-testing volume is expected to decrease by 12% next year. However, awareness of radon-related health hazards is expected to result in a 4% increase in radon-test volume each year in the near future. Jim Cole feels that if he lowers his price for lead testing to $230 per test, he will have to face only an 7% decline in lead-test sales in 2018. Requirements 1. Prepare a 2018 sales budget for Cole & Sons assuming that Cole holds prices at 2017 levels. 2. Prepare a 2018 sales budget for Cole & Sons assuming that Cole lowers the price of a lead test to $230. Should Cole lower the price of a lead test in 2018 if the company's goal is to maximize sales revenue?
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Vernon-Nelson Chemicals is planning to release a new brand of insecticide, Bee-Safe, that will kill many insect pests but not harm useful pollinators. Buying new equipment to manufacture the product will cost $15 million. The equipment is expected to have a lifetime of 10 years and will be depreciated by the straight-line method over its lifetime. The firm expects that they should be able to sell 1,500,000 gallons per year at a price of $53 per gallon. It will take $36 per gallon to manufacture and support the product. If Vernon-Nelson's marginal tax rate is 40%, what are the incremental earnings after tax in year 3 of this project?

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