10:56 AM Montgomery Arrowhead Wednesday 11:16 AM Edit OLIVE Total revenues Cost
ID: 341985 • Letter: 1
Question
10:56 AM Montgomery Arrowhead Wednesday 11:16 AM Edit OLIVE Total revenues Cost of goods sold Groas margin Total operating costs Operating income Requirement 2. How well does the budget align with EZ Video's strategy? The budget aligns equipment by hiring maintenence technicians and increasing costs of customer maintenance Requirement 3. How does preparing the budget help EZ Video's management team beter manage the company? The budget helps EZ Video's management team (Select all that apply ) coordinate and communicate across different parts of the organization manage costs based on revenues and production needs coordinate and communicate across different parts of the organization create a framework for judging performance 1: Data Table EZ Video Company Income Statement for the Year Ended December 31, 2017 (in thousands)Explanation / Answer
Answers of more info:
1. Selling price is exp to inc by 15%, and maintenance to remain same. Therefore Selling price of equipment = 9500 x 115% = 10925.
2. Since there is 8% inc in sales of equipment and maintenance, revenue will be revised sales x 108%, i.e. Equipment = 10925 x 108% = 11799. and Maintenance = 1800 x 108% = 1944
3. Cost to increase by 3%, hence new cost = 4100 x 108% x 103% (8% growth in units and hence 8% growth in Cost of goods sold also) = 4561
4. Marketing cost increase by 280, therefore new cost = 680 + 280 = 960 and admin cost same as 2017 level i.e. 930.
5. Distribution costs vary with the number of units sold. Since there is growth of 8% in sales, distribution costs will also increase by 8%. Budget cost = 130 x 108% = 140
6. 2 new maintenance engg to improve the customer service. Hence these costs will be added to customer maintenance. Budget cost = 1900 + 190 = 2090
7. No beginning or closing inventory, hence no effect to be made in COGS.
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