incinnati Tool Company
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![PR 7-49 (Static) 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
$ 28
Required:
1. Determine CTC's budgeted net income for 20x2.
13
5
Budgeted net income.
Hedge Clippers Leaf Blowers
50,000
100,000
$36
$ 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.
12
4
PR 7-49 (Static) Part 1: Determine CTC's budgeted net income for 20x2.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F4d4b00a5-a55d-4357-96b4-1a47e0f88e7c%2Fefa0cd13-aa5a-490f-a24b-f5d5ddf133ab%2F4ph3f8r_processed.jpeg&w=3840&q=75)
Transcribed Image Text:PR 7-49 (Static) 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
$ 28
Required:
1. Determine CTC's budgeted net income for 20x2.
13
5
Budgeted net income.
Hedge Clippers Leaf Blowers
50,000
100,000
$36
$ 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.
12
4
PR 7-49 (Static) Part 1: Determine CTC's budgeted net income for 20x2.
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