Kramer Enterprises reports year ed information as follows.. Sales (160,000 units
ID: 2543172 • Letter: K
Question
Kramer Enterprises reports year ed information as follows.. Sales (160,000 units) = 960,000 COGS= 640,000 Gross margin= 320,000 Operating expenses= 260,000 Operating income= 60,000
Kramer is developing the 2016 budget. in 2016 the company would like to increase selling prices by 12.5%, and as a result expects a decrease in sales volume by 9%. All other operating expesnes are expected to remain constant. Assume that costs of goods sold is a variable cost and that operating expenses are a fixed cost..
A. What is the budgeted sales for 2016? 1,080,000... 1,000,000... 982,800... or 873,600.
B. What is the budgeted COGS for 2016... 720,000... 582,400... 691,200... 640,000...
C. Should Kramer increase the selling price? Yes, because operating income increases for 2016... Yes, because sales revenue increases for 2016.... No, because sales volume decreases for 2016... No, because gross margin decreases for 2016...
Explanation / Answer
Answer:-A)-Budgeted sales for 2016 =145600 units*$6.75 per unit =$982800
B)-Budgeted COGS for 2016=($640000/160000 units)*145600 units= $582400
C)-New operating income =$982800-$582400-$260000 =$140400
Kramer should increase the selling price because operating income increases from $60000 to $140400 for 2016.
Explanation:-
Sales (160000 units)=$960000
Selling price unit =$960000/160000 units =$6 per unit
Increased selling price =$6 per unit*112.5% = $6.75 per unit
New sales volume =160000 units*91% =145600 units
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.