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 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.
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 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
Related questions
Question
![Required information
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
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.
PR 7-49 (Static) Part 3: Management determined that its variable manufacturing cost of leaf blowers
would increase by 20 percent...
3. After preparing the original estimates, management determined that its variable manufacturing cost of leaf blowers would increase
by 20 percent, and the variable selling cost of hedge clippers could be expected to increase by $1.00 per unit. However, management
has decided not to change the selling price of either product. In addition, management has learned that its leaf blower has been
perceived as the best value on the market, and it can expect to sell three times as many leaf blowers as each of its other products.
Under these circumstances, determine how many units of each product CTC would have to sell in order to break even in 20x2.
Note: Do not round intermediate calculations.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F17c82d0d-e616-4f15-b615-71aaa3634869%2Fd6ab3cd1-e364-4e90-a859-8c165d44fef9%2F99bco78_processed.png&w=3840&q=75)
Transcribed Image Text:Required information
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
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.
PR 7-49 (Static) Part 3: Management determined that its variable manufacturing cost of leaf blowers
would increase by 20 percent...
3. After preparing the original estimates, management determined that its variable manufacturing cost of leaf blowers would increase
by 20 percent, and the variable selling cost of hedge clippers could be expected to increase by $1.00 per unit. However, management
has decided not to change the selling price of either product. In addition, management has learned that its leaf blower has been
perceived as the best value on the market, and it can expect to sell three times as many leaf blowers as each of its other products.
Under these circumstances, determine how many units of each product CTC would have to sell in order to break even in 20x2.
Note: Do not round intermediate calculations.
Transcribed Image Text:Weeders
Hedge Clippers
Leaf Blowers
Total
Product Line Sales
units
units
units
units
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