Sherry and John Enterprises are using the kaizen approach to budgeting for 2018. The budgeted income...

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Sherry and John Enterprises are using the kaizen approach to budgeting for 2018. The budgeted income...

Sherry and John Enterprises are using the kaizen approach to budgeting for 2018. The budgeted income statement for January 2018 is as follows:

Sales (168,000 units) $1,080,000

Less: Cost of goods sold 650,000

Gross margin 430,000

Operating expenses 330,000

(includes $60,000 of fixed costs)

Operating income $100,000

Under the kaizen approach, cost of goods sold and variable operating expenses are budgeted to decline by 1% per month.

What is budgeted cost of goods sold for March 2018?

$650,000
	$637,065
	$656,500
	$643,500

business accounting

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Answer 1

Answer #1

Budgeted cost of goods sold for Feb 2018

= 650000-(650000×1%)

=$643500

Budgeted cost of goods sold for March 2018

= 643500-(643500×1%)

=$637065

Budgeted variable operating expenses for jan 2018

=330000-60000

=$270000

Budgeted variable operating expenses for March 2018

=270000×99%×99%

=$264627

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Answer 2

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