EBK HORNGREN'S COST ACCOUNTING
16th Edition
ISBN: 9780134475950
Author: Datar
Publisher: PEARSON CO
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 6, Problem 6.21E
Sales budget, service setting. In 2017 Hart & Sons, a small environmental-testing firm, performed 11,400 radon tests for $260 each and 15,000 lead tests for $210 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 Hart feels that if he lowers his price for lead testing to $200 per test, he will have to face only a 4% decline in lead-test sales in 2018.
- 1. Prepare a 2018 sales budget for Hart & Sons assuming that Hart holds prices at 2017 levels.
- 2. Prepare a 2018 sales budget for Hart & Sons assuming that Hart lowers the price of a lead test to $200. Should Hart lower the price of a lead test in 2018 if the company’s goal is to maximize sales revenue?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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?
In
2020,
Alderman
& Sons, a small environmental-testing firm, performed
12,400
radon tests for
$320
each and
16,600
lead tests for
$220
each. Because newer homes are being built with lead-free pipes, lead-testing volume is expected to decrease by
15%
next year. However, awareness of radon-related health hazards is expected to result in a
6%
increase in radon-test volume each year in the near future. Jim
Alderman
feels that if he lowers his price for lead testing to
$210
per test, he will have to face only a
5%
decline in lead-test sales in
2021.
Read the
requirements
LOADING...
.
Requirement 1. Prepare the sales budget for
Alderman
& Sons assuming that prices are held at
2020
levels.
Sales Budget
For the Year Ended December 31, 2021
Total revenues
Radon tests
Lead tests
Total
Requirement 2. Prepare the sales budget assuming that
Alderman
lowers the price of a…
The vice-president of sales and marketing, Madison Tremblay, is trying to plan for the coming year in terms of production needs to
meet the forecast sales. The board of directors is very supportive of any initiatives that will lead to increased operating income for the
company in the upcoming year.
Waterways markets a simple water controller and timer that it mass-produces. During 2022. the company sold 322.500 units at an
average selling price of $8.00 per unit. The variable costs were $1,193,250. and the fixed costs were $606,300.
What is the margin of safety, both in dollars and as a ratio? (Round ratio to 2 decimal places, e.g. 25.25%)
$
Margin of safety in dollars
Margin of safety ratio
Chapter 6 Solutions
EBK HORNGREN'S COST ACCOUNTING
Ch. 6 - What are the four elements of the budgeting cycle?Ch. 6 - Define master budget.Ch. 6 - Strategy, plans, and budgets are unrelated to ore...Ch. 6 - Budgeted performance is a better criterion than...Ch. 6 - Production managers and marketing managers are...Ch. 6 - Budgets meet the cost-benefit test. They force...Ch. 6 - Define rolling budget. Give an example.Ch. 6 - Outline the steps in preparing an operating...Ch. 6 - The sales forecast is the cornerstone for...Ch. 6 - Prob. 6.10Q
Ch. 6 - Define Kaizen budgeting.Ch. 6 - Prob. 6.12QCh. 6 - Explain how the choice of the type of...Ch. 6 - What are some additional considerations that arise...Ch. 6 - Prob. 6.15QCh. 6 - Master budget. Which of the following statements...Ch. 6 - Operating and financial budgets. Which of the...Ch. 6 - Production budget. Superior Industries sales...Ch. 6 - Responsibility centers. Elmhurst Corporation is...Ch. 6 - Cash budget. Mary Jacobs, the controller of the...Ch. 6 - Sales budget, service setting. In 2017 Hart Sons,...Ch. 6 - Sales and production budget. The Coby Company...Ch. 6 - Direct material budget. Dawson Co. produces wine....Ch. 6 - Material purchases budget. The McGrath Company has...Ch. 6 - Revenues, production, and purchases budgets. The...Ch. 6 - Revenues and production budget. Saphire, Inc.,...Ch. 6 - Budgeting; direct material usage, manufacturing...Ch. 6 - Budgeting, service company. Ever Clean Company...Ch. 6 - Budgets for production and direct manufacturing...Ch. 6 - Activity-based budgeting. The Jerico store of...Ch. 6 - Kaizen approach to activity-based budgeting...Ch. 6 - Responsibility and controllability. Consider each...Ch. 6 - Responsibility, controllability, and stretch...Ch. 6 - Cash flow analysis, sensitivity analysis....Ch. 6 - Budget schedules for a manufacturer. Hale...Ch. 6 - Budgeted costs, Kaizen improvements environmental...Ch. 6 - Revenue and production budgets. (CPA, adapted) The...Ch. 6 - Budgeted income statement. (CMA, adapted) Smart...Ch. 6 - Prob. 6.39PCh. 6 - Comprehensive problem with ABC costing. Animal...Ch. 6 - Cash budget (continuation of 6-40). Refer to the...Ch. 6 - Comprehensive operating budget. Skulas, Inc.,...Ch. 6 - Cash budgeting, budgeted balance sheet....Ch. 6 - Comprehensive problem; ABC manufacturing, two...Ch. 6 - Cash budget. (Continuation of 6-44) (Appendix)...Ch. 6 - Budgeting and ethics. Jayzee Company manufactures...Ch. 6 - Kaizen budgeting for carbon emissions. Apex...Ch. 6 - Comprehensive budgeting problem; activity-based...
Additional Business Textbook Solutions
Find more solutions based on key concepts
Analysis of inventory errors A2 Hallam Company’s financial statements show the following. The company recently ...
FINANCIAL ACCT.FUND.(LOOSELEAF)
Bank loan; accrued interest LO132 On October 1, Eder Fabrication borrowed 60 million and issued a nine-month, ...
INTERMEDIATE ACCOUNTING
Calculating certain information using the direct method (Learning Objective 4) 20-25 min. Trudeaus Marine, Inc....
Financial Accounting, Student Value Edition (5th Edition)
Using the information from Problem 1-2B and the inventory information for the Best Bikes below, complete the re...
Managerial Accounting
18. What is the calculation for return on assets (ROA)? Explain what ROA measures.
Horngren's Financial & Managerial Accounting, The Financial Chapters (6th Edition)
Plantwide and Departmental Overhead Allocation; Activity-Based Costing; Segmented Income Statements Koontz Comp...
Introduction To Managerial Accounting
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Thomasville Furniture Industries offers several types of high-performance fabrics that are capable of withstanding chemicals as harsh as chlorine. A Midwestern manufacturing company that uses fabric in several products has a report showing that the present worth of fabric purchases over a specified 5-year period was $900,000. If the costs are known to have increased geometrically by 5% per year during that time and the company uses an interest rate of 15% per year for investments, what was the cost of the fabric in year 1?arrow_forwardBIG Pharmaceuticals Ltd. has invested $330,000 to date in developing a new typeof insect repellent. The repellent is now ready for production and sale, and theMarketing Manager estimates that the product will sell 170,000 bottles in the firstyear, 210,000 bottles in the second years and 260,000 bottles a year over the nextthree years. The selling price of the insect repellent will be $6.00 a bottle andvariable costs are estimated to be $3.00 a bottle. Second- and third-year price willbe $6.99 a bottle with a variable cost of $3.50 a bottle, Fourth- and fifth yearselling price will be $7.95 with a variable cost of $3.75. Fixed costs (excludingamortization) are expected to be $210,000 a year. The figure is made up of$165,000 additional fixed costs and $45,000 fixed costs relating to the existingbusiness that will be apportioned to the new business. These costs will increaseby 5% each year.To produce the repellent, machinery and equipment costing $650,000 will have tobe purchased…arrow_forwardBIG Pharmaceuticals Ltd. has invested $330,000 to date in developing a new typeof insect repellent. The repellent is now ready for production and sale, and theMarketing Manager estimates that the product will sell 170,000 bottles in the firstyear, 210,000 bottles in the second years and 260,000 bottles a year over the nextthree years. The selling price of the insect repellent will be $6.00 a bottle andvariable costs are estimated to be $3.00 a bottle. Second- and third-year price willbe $6.99 a bottle with a variable cost of $3.50 a bottle, Fourth- and fifth yearselling price will be $7.95 with a variable cost of $3.75. Fixed costs (excludingamortization) are expected to be $210,000 a year. The figure is made up of$165,000 additional fixed costs and $45,000 fixed costs relating to the existingbusiness that will be apportioned to the new business. These costs will increaseby 5% each year.To produce the repellent, machinery and equipment costing $650,000 will have tobe purchased…arrow_forward
- An automobile manufacturer plans to spend $1 billion to improve the quality of a new model. The manufacturer expects the quality-improvement program to eliminate the need for recall and reduce the costs forother warranty repairs. The firm’s experience had been, on average, 1.5 recalls for each new model at acost of $300 per vehicle per recall. The average cost per recall, if one is needed, is expected to increase by10% for the new model. Costs for other warranty repairs are expected to decrease from $200 to $80 per unitsold. Sales of the new model were expected to be 500,000 units without the quality-improvement program.The company believes that the well-publicized quality-improvement program will increase total sales to650,000 units. If there is a profit of $5,000 per unit on any incremental sales attributable to the qualityimprovement program, is the $1 billion expenditure justified?arrow_forwardConsider a proposal to enhance the vision system used by a postal service to sort mail. The new system is estimated to cost $1.1 million and will incur an additiona $200,000 per year in maintenance costs. The system will produce annual savings of $500,000 each year (primarily by decreasing the percentage of misdirected mail and reducing the amount of mail that must be sorted manually). The MARR is 10% per year, and the study period is five years at which time the system will be technologically obsolete (worthless). The PW of this proposal is PW(10%) = −$1,100,000 + ($500,000 − $200,000)(P/A, 10%, 5) = $37,236. Determine how sensitive the decision to invest in the system is to the estimates of investment cost and annual savings.arrow_forwardNote:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
- Pls help with below homework.arrow_forwardplease answere this problems manually. Thank you...arrow_forwardA company intends to install new management software for its warehouse. The software will cost $47,000 to buy and will cost an additional $148,000 to install and implement. It is anticipated that it will save the company $44,000 through reductions in staff and $69,000 in general inventory costs in the first year after installation. What is the total benefit to the company in the first year if they choose to install the software?arrow_forward
- Use an excel spreedsheet to answer this question: The National Potato Cooperative purchased a deskinning machine last year for $150,000. Revenue for the first year was $ 50,000. Over the total estimated life of 8 years, use a spreadsheet to estimate the remaining equivalent annual revenues (years 2 through 8) to ensure breakeven by recovering the investment and a return of 10% per year. Costs are expected to be constant at $42,000 per year and a salvage value of $10,000 is anticipated.arrow_forward. Apex Chemical Company currently operates three manufacturing plants in Colorado, Utah, and Arizona. Annual carbon emissions for these plants in the first quarter of 2018 are 125,000 metric tons per quarter (or 500,000 metric tons in 2018). Apex management is investigating improved manufacturing techniques that will reduce annual carbon emissions to below 475,000 metric tons so that the company can meet Environmental Protection Agency guidelines by 2019. Costs and benefits are as follows: Total cost to reduce carbon emissions $10 per metric ton reduced in 2019 below 500,000 metric tons Fine in 2019 if EPA guidelines are not met $300,000 Apex Management has chosen to use Kaizen budgeting to achieve its goal for carbon emissions. Q. If Apex reduces emissions by 1% each quarter, beginning with the second quarter of 2018, will the company reach its goal of 475,000 metric tons by the end of 2019?arrow_forward. Apex Chemical Company currently operates three manufacturing plants in Colorado, Utah, and Arizona. Annual carbon emissions for these plants in the first quarter of 2018 are 125,000 metric tons per quarter (or 500,000 metric tons in 2018). Apex management is investigating improved manufacturing techniques that will reduce annual carbon emissions to below 475,000 metric tons so that the company can meet Environmental Protection Agency guidelines by 2019. Costs and benefits are as follows: Total cost to reduce carbon emissions $10 per metric ton reduced in 2019 below 500,000 metric tons Fine in 2019 if EPA guidelines are not met $300,000 Apex Management has chosen to use Kaizen budgeting to achieve its goal for carbon emissions. Q.What factors other than cost might weigh into Apex’s decision to carry out this plan?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Responsibility Accounting| Responsibility Centers and Segments| US CMA Part 1| US CMA course; Master Budget and Responsibility Accounting-Intro to Managerial Accounting- Su. 2013-Prof. Gershberg; Author: Mera Skill; Rutgers Accounting Web;https://www.youtube.com/watch?v=SYQ4u1BP24g;License: Standard YouTube License, CC-BY