16th Edition

ISBN: 9781323169261

Author: Horngren

Publisher: PEARSON C

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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…

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…

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Textbook Question

Chapter 3, Problem 3.24E

CVP exercises. The Deli-Sub Shop owns and operates six stores in and around Minneapolis. You are given the following corporate budget data for next year:

Revenues	$11,000,000
Fixed costs	$ 3,000,000
Variable costs	$ 7,500,000

Variable costs change based on the number of subs sold.

Compute the budgeted operating income for each of the following deviations from the original budget data. (Consider each case independently.)

1. A 10% increase in contribution margin, holding revenues constant

Required

2. A 10% decrease in contribution margin, holding revenues constant
3. A 5% increase in fixed costs
4. A 5% decrease in fixed costs
5. A 5% increase in units sold
6. A 5% decrease in units sold
7. A 10% increase in fixed costs and a 10% increase in units sold
8. A 5% increase in fixed costs and a 5% decrease in variable costs
9. Which of these alternatives yields the highest budgeted operating income? Explain why this is the case.

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Chapter 3, Problem 3.23E

Chapter 3, Problem 3.25E

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The Deli-Sub Shop owns and operates six stores in and around Minneapolis. You are given the following corporate budget data for next year:Revenues $11,000,000 Fixed costs $ 3,000,000 Variable costs $ 7,500,000 Variable costs change based on the number of subs sold. Compute the budgeted operating income for each of the following deviations from the original budget data. (Consider each case independently.) Q1. A 10% increase in contribution margin, holding revenues constant Q2. A 10% decrease in contribution margin, holding revenues constant Q3. A 5% increase in fixed costs Q4. A 5% decrease in fixed costs Q5. A 5% increase in units sold Q6. A 5% decrease in units sold Q7. A 10% increase in fixed costs and a 10% increase in units sold Q8. A 5% increase in fixed costs and a 5% decrease in variable costs Q9. Which of these alternatives yields the highest budgeted operating income? Explain why this is the case.

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Chapter 3 Solutions

COST ACCOUNTING

Ch. 3 - Define costvolumeprofit analysis.Ch. 3 - Describe the assumptions underlying CVP analysis.Ch. 3 - Distinguish between operating income and net...Ch. 3 - Prob. 3.4Q Ch. 3 - Prob. 3.5Q Ch. 3 - Why is it more accurate to describe the subject...Ch. 3 - CVP analysis is both simple and simplistic. If you...Ch. 3 - Prob. 3.8Q Ch. 3 - Prob. 3.9Q Ch. 3 - Give an example of how a manager can decrease...

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