Cincinnati Tool Company (CTC) manufactures a line of electric garden tools that are sold in general hardware stores. The company’s controller. Will Fulton, has just received the sales forecast for the coming year for CTC’s three products: hedge clippers, weeders, and leaf blowers. CTC has experienced considerable variations in sales volume and variable costs over the past two years. and Fulton believes the forecast should be carefully evaluated from a cost-volume-profit view point. The preliminary budget information for 20x2 follows:
Weeders | Hedge Clippers | Leaf Blowers | |
Unit sales | 50,000 | 50,000 | 100,000 |
Unit selling price | $ 28 | $ 36 | $ 48 |
Variable manufacturing cost per unit | 13 | 12 | 25 |
Variable selling cost per unit | 5 | 4 | 6 |
For 20x2. CTC’s fixed manufacturing overhead is budgeted at $2,000,000. and the company’s fixed seiling and administrative expenses are forecasted to be $600,000. CTC has a tax rate of 40 percent.
Required:
1. Determine CTC’s budgeted net income for 20x2.
2. Assuming the sales mix remains as budgeted, determine how many units of each product CTC must sell in order to breakeven in 20x2.
3. After preparing the original estimates. management determined that its variable manufacturing cost of leaf blowers would increase by 20 percent. and the variable selling cost of hedge clippers could be expected to increase by $ 1.00 per unit. However. management has decided not to change the selling price of either product. In addition, management has learned that its leaf blower has been perceived as the best value on the market. and it can expect to sell three times as many leaf blowers as each of its other products. Under these circumstances. determine how many units of each product CTC would have to sell in order to break even in 20x2.
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.