Rerun Manufacturing Company is in the process of preparing its 2020 budget and is anticipating the following changes: 30% increase in the number of units sold. 20% increase in the direct material unit cost. 15% increase in the direct labor cost per unit. 10% increase in the manufacturing overhead cost per unit. 20% increase in the sales price. 7% increase in the administrative expenses. Rerun does not keep any units in inventory. The composition of the cost of finished products during 2019 for direct materials, direct labor, and factory overhead, respectively, was in the ratio of 3:2:1. The condensed income statement for 2019 is as follows: Sales (37,000 units) $518,000 Less sales returns 25,900 492,100 313,000 Net sales Cost of Goods Sold Gross Profit $179,100 $ 67,000 Selling Expenses Admin. Expenses 37,000 104,000 Net Income $ 75,100 What are estimated net sales for 2020, assuming the sales return/gross sales relationship remains constant? Multiple Choice $767,676. $685,425. $721,500. $718,900.

Rerun Manufacturing Company is in the process of preparing its 2020 budget and is anticipating the following changes: 30% increase in the number of units sold. 20% increase in the direct material unit cost. 15% increase in the direct labor cost per unit. 10% increase in the manufacturing overhead cost per unit. 20% increase in the sales price. 7% increase in the administrative expenses. Rerun does not keep any units in inventory. The composition of the cost of finished products during 2019 for direct materials, direct labor, and factory overhead, respectively, was in the ratio of 3:2:1. The condensed income statement for 2019 is as follows: Sales (37,000 units) $518,000 Less sales returns 25,900 492,100 313,000 Net sales Cost of Goods Sold Gross Profit $179,100 $ 67,000 Selling Expenses Admin. Expenses 37,000 104,000 Net Income $ 75,100 What are estimated net sales for 2020, assuming the sales return/gross sales relationship remains constant? Multiple Choice $767,676. $685,425. $721,500. $718,900.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

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.

Question

Rerun Manufacturing Company is in the process of preparing its 2020 budget and is anticipating the following changes:
30% increase in the number of units sold.
20% increase in the direct material unit cost.
15% increase in the direct labor cost per unit.
10% increase in the manufacturing overhead cost per unit.
20% increase in the sales price.
7% increase in the administrative expenses.
Rerun does not keep any units in inventory.
The composition of the cost of finished products during 2019 for direct materials, direct labor, and factory overhead, respectively, was in the ratio of 3:2:1.
The condensed income statement for 2019 is as follows:
Sales (37,000 units)
$518,000
25,900
492,100
Less sales returns
Net sales
Cost of Goods Sold
313,000
Gross Profit
$179,100
$ 67,000
Selling Expenses
Admin. Expenses
37,000
104,000
Net Income
$ 75,100
What are estimated net sales for 2020, assuming the sales return/gross sales relationship remains constant?
Multiple Choice
$767,676.
$685,425.
$721,500.
$718,900.

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