Berring Company produces two products: the deluxe and the standard. The deluxe sells for $40, and the standard sells for $10. Projected sales of the two models for the coming four quarters are given below. Deluxe Standard First quarter 12,000 90,000 Second quarter 14,200 88,600 Third quarter 16,800 93,000 Fourth quarter 20,000 91,400 The president of the company believes that the projected sales are realistic and can be achieved by the company. In the factory, the production supervisor has received the projected sales figures and gathered information needed to compile production budgets. He found that 1,300 deluxes and 1,170 standards were in inventory on January 1. Company policy dictates that ending inventory should equal 20 percent of the next quarter’s sales for deluxes and 10 percent of next quarter’s sales for standards. Required: Question Content Area 1. Prepare a sales budget for each quarter and for the year in total. Show sales by product and in total for each time period. Berring CompanySales BudgetFor the Year Ended December 31 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Deluxe: Units fill in the blank 7de38b053028fb3_1 fill in the blank 7de38b053028fb3_2 fill in the blank 7de38b053028fb3_3 fill in the blank 7de38b053028fb3_4 fill in the blank 7de38b053028fb3_5 Unit price $fill in the blank 7de38b053028fb3_6 $fill in the blank 7de38b053028fb3_7 $fill in the blank 7de38b053028fb3_8 $fill in the blank 7de38b053028fb3_9 $fill in the blank 7de38b053028fb3_10 Sales $fill in the blank 7de38b053028fb3_11 $fill in the blank 7de38b053028fb3_12 $fill in the blank 7de38b053028fb3_13 $fill in the blank 7de38b053028fb3_14 $fill in the blank 7de38b053028fb3_15 Standard: Units fill in the blank 7de38b053028fb3_16 fill in the blank 7de38b053028fb3_17 fill in the blank 7de38b053028fb3_18 fill in the blank 7de38b053028fb3_19 fill in the blank 7de38b053028fb3_20 Unit price $fill in the blank 7de38b053028fb3_21 $fill in the blank 7de38b053028fb3_22 $fill in the blank 7de38b053028fb3_23 $fill in the blank 7de38b053028fb3_24 $fill in the blank 7de38b053028fb3_25 Sales $fill in the blank 7de38b053028fb3_26 $fill in the blank 7de38b053028fb3_27 $fill in the blank 7de38b053028fb3_28 $fill in the blank 7de38b053028fb3_29 $fill in the blank 7de38b053028fb3_30 Total Sales $fill in the blank 7de38b053028fb3_31 $fill in the blank 7de38b053028fb3_32 $fill in the blank 7de38b053028fb3_33 $fill in the blank 7de38b053028fb3_34 $fill in the blank 7de38b053028fb3_35 Question Content Area 2. Prepare a separate production budget for each product for each of the first three quarters of the year. Production budget for deluxes: Berring CompanyProduction Budget for DeluxesFirst Three Quarters of the Year Quarter 1 Quarter 2 Quarter 3 Unit sales fill in the blank 77796cfd6f84017_1 fill in the blank 77796cfd6f84017_2 fill in the blank 77796cfd6f84017_3 - Select - - Select - - Select - Total needed fill in the blank 77796cfd6f84017_8 fill in the blank 77796cfd6f84017_9 fill in the blank 77796cfd6f84017_10 - Select - - Select - - Select - Units produced fill in the blank 77796cfd6f84017_15 fill in the blank 77796cfd6f84017_16 fill in the blank 77796cfd6f84017_17 Question Content Area Production budget for standards: Berring CompanyProduction Budget for StandardsFirst Three Quarters of the Year Quarter 1 Quarter 2 Quarter 3 Unit sales fill in the blank b45559fe7f9506d_1 fill in the blank b45559fe7f9506d_2 fill in the blank b45559fe7f9506d_3 - Select - - Select - - Select - Total needed fill in the blank b45559fe7f9506d_8 fill in the blank b45559fe7f9506d_9 fill in the blank b45559fe7f9506d_10 - Select - - Select - - Select - Units produced fill in the blank b45559fe7f9506d_15 fill in the blank b45559fe7f9506d_16 fill in the blank b45559fe7f9506d_17
Berring Company produces two products: the deluxe and the standard. The deluxe sells for $40, and the standard sells for $10. Projected sales of the two models for the coming four quarters are given below. Deluxe Standard First quarter 12,000 90,000 Second quarter 14,200 88,600 Third quarter 16,800 93,000 Fourth quarter 20,000 91,400 The president of the company believes that the projected sales are realistic and can be achieved by the company. In the factory, the production supervisor has received the projected sales figures and gathered information needed to compile production budgets. He found that 1,300 deluxes and 1,170 standards were in inventory on January 1. Company policy dictates that ending inventory should equal 20 percent of the next quarter’s sales for deluxes and 10 percent of next quarter’s sales for standards. Required: Question Content Area 1. Prepare a sales budget for each quarter and for the year in total. Show sales by product and in total for each time period. Berring CompanySales BudgetFor the Year Ended December 31 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year Deluxe: Units fill in the blank 7de38b053028fb3_1 fill in the blank 7de38b053028fb3_2 fill in the blank 7de38b053028fb3_3 fill in the blank 7de38b053028fb3_4 fill in the blank 7de38b053028fb3_5 Unit price $fill in the blank 7de38b053028fb3_6 $fill in the blank 7de38b053028fb3_7 $fill in the blank 7de38b053028fb3_8 $fill in the blank 7de38b053028fb3_9 $fill in the blank 7de38b053028fb3_10 Sales $fill in the blank 7de38b053028fb3_11 $fill in the blank 7de38b053028fb3_12 $fill in the blank 7de38b053028fb3_13 $fill in the blank 7de38b053028fb3_14 $fill in the blank 7de38b053028fb3_15 Standard: Units fill in the blank 7de38b053028fb3_16 fill in the blank 7de38b053028fb3_17 fill in the blank 7de38b053028fb3_18 fill in the blank 7de38b053028fb3_19 fill in the blank 7de38b053028fb3_20 Unit price $fill in the blank 7de38b053028fb3_21 $fill in the blank 7de38b053028fb3_22 $fill in the blank 7de38b053028fb3_23 $fill in the blank 7de38b053028fb3_24 $fill in the blank 7de38b053028fb3_25 Sales $fill in the blank 7de38b053028fb3_26 $fill in the blank 7de38b053028fb3_27 $fill in the blank 7de38b053028fb3_28 $fill in the blank 7de38b053028fb3_29 $fill in the blank 7de38b053028fb3_30 Total Sales $fill in the blank 7de38b053028fb3_31 $fill in the blank 7de38b053028fb3_32 $fill in the blank 7de38b053028fb3_33 $fill in the blank 7de38b053028fb3_34 $fill in the blank 7de38b053028fb3_35 Question Content Area 2. Prepare a separate production budget for each product for each of the first three quarters of the year. Production budget for deluxes: Berring CompanyProduction Budget for DeluxesFirst Three Quarters of the Year Quarter 1 Quarter 2 Quarter 3 Unit sales fill in the blank 77796cfd6f84017_1 fill in the blank 77796cfd6f84017_2 fill in the blank 77796cfd6f84017_3 - Select - - Select - - Select - Total needed fill in the blank 77796cfd6f84017_8 fill in the blank 77796cfd6f84017_9 fill in the blank 77796cfd6f84017_10 - Select - - Select - - Select - Units produced fill in the blank 77796cfd6f84017_15 fill in the blank 77796cfd6f84017_16 fill in the blank 77796cfd6f84017_17 Question Content Area Production budget for standards: Berring CompanyProduction Budget for StandardsFirst Three Quarters of the Year Quarter 1 Quarter 2 Quarter 3 Unit sales fill in the blank b45559fe7f9506d_1 fill in the blank b45559fe7f9506d_2 fill in the blank b45559fe7f9506d_3 - Select - - Select - - Select - Total needed fill in the blank b45559fe7f9506d_8 fill in the blank b45559fe7f9506d_9 fill in the blank b45559fe7f9506d_10 - Select - - Select - - Select - Units produced fill in the blank b45559fe7f9506d_15 fill in the blank b45559fe7f9506d_16 fill in the blank b45559fe7f9506d_17
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
Question
Berring Company produces two products: the deluxe and the standard. The deluxe sells for $40, and the standard sells for $10. Projected sales of the two models for the coming four quarters are given below.
| Deluxe | Standard | |
| First quarter | 12,000 | 90,000 |
| Second quarter | 14,200 | 88,600 |
| Third quarter | 16,800 | 93,000 |
| Fourth quarter | 20,000 | 91,400 |
The president of the company believes that the projected sales are realistic and can be achieved by the company. In the factory, the production supervisor has received the projected sales figures and gathered information needed to compile production budgets. He found that 1,300 deluxes and 1,170 standards were in inventory on January 1. Company policy dictates that ending inventory should equal 20 percent of the next quarter’s sales for deluxes and 10 percent of next quarter’s sales for standards.
Required:
Question Content Area
1. Prepare a sales budget for each quarter and for the year in total. Show sales by product and in total for each time period.
| Quarter 1 | Quarter 2 | Quarter 3 | Quarter 4 | Year | |
| Deluxe: | |||||
| Units | fill in the blank 7de38b053028fb3_1 | fill in the blank 7de38b053028fb3_2 | fill in the blank 7de38b053028fb3_3 | fill in the blank 7de38b053028fb3_4 | fill in the blank 7de38b053028fb3_5 |
| Unit price | $fill in the blank 7de38b053028fb3_6 | $fill in the blank 7de38b053028fb3_7 | $fill in the blank 7de38b053028fb3_8 | $fill in the blank 7de38b053028fb3_9 | $fill in the blank 7de38b053028fb3_10 |
| Sales | $fill in the blank 7de38b053028fb3_11 | $fill in the blank 7de38b053028fb3_12 | $fill in the blank 7de38b053028fb3_13 | $fill in the blank 7de38b053028fb3_14 | $fill in the blank 7de38b053028fb3_15 |
| Standard: | |||||
| Units | fill in the blank 7de38b053028fb3_16 | fill in the blank 7de38b053028fb3_17 | fill in the blank 7de38b053028fb3_18 | fill in the blank 7de38b053028fb3_19 | fill in the blank 7de38b053028fb3_20 |
| Unit price | $fill in the blank 7de38b053028fb3_21 | $fill in the blank 7de38b053028fb3_22 | $fill in the blank 7de38b053028fb3_23 | $fill in the blank 7de38b053028fb3_24 | $fill in the blank 7de38b053028fb3_25 |
| Sales | $fill in the blank 7de38b053028fb3_26 | $fill in the blank 7de38b053028fb3_27 | $fill in the blank 7de38b053028fb3_28 | $fill in the blank 7de38b053028fb3_29 | $fill in the blank 7de38b053028fb3_30 |
| Total Sales | $fill in the blank 7de38b053028fb3_31 | $fill in the blank 7de38b053028fb3_32 | $fill in the blank 7de38b053028fb3_33 | $fill in the blank 7de38b053028fb3_34 | $fill in the blank 7de38b053028fb3_35 |
Question Content Area
2. Prepare a separate production budget for each product for each of the first three quarters of the year.
Production budget for deluxes:
| Quarter 1 | Quarter 2 | Quarter 3 | |
|---|---|---|---|
| Unit sales | fill in the blank 77796cfd6f84017_1 | fill in the blank 77796cfd6f84017_2 | fill in the blank 77796cfd6f84017_3 |
|
|
- Select - | - Select - | - Select - |
| Total needed | fill in the blank 77796cfd6f84017_8 | fill in the blank 77796cfd6f84017_9 | fill in the blank 77796cfd6f84017_10 |
|
|
- Select - | - Select - | - Select - |
| Units produced | fill in the blank 77796cfd6f84017_15 | fill in the blank 77796cfd6f84017_16 | fill in the blank 77796cfd6f84017_17 |
Question Content Area
Production budget for standards:
| Quarter 1 | Quarter 2 | Quarter 3 | |
|---|---|---|---|
| Unit sales | fill in the blank b45559fe7f9506d_1 | fill in the blank b45559fe7f9506d_2 | fill in the blank b45559fe7f9506d_3 |
|
|
- Select - | - Select - | - Select - |
| Total needed | fill in the blank b45559fe7f9506d_8 | fill in the blank b45559fe7f9506d_9 | fill in the blank b45559fe7f9506d_10 |
|
|
- Select - | - Select - | - Select - |
| Units produced | fill in the blank b45559fe7f9506d_15 | fill in the blank b45559fe7f9506d_16 | fill in the blank b45559fe7f9506d_17 |
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