Rerun Manufacturing Company is in the process of preparing its 2020 budget and is anticipating the following changes: 30% increase in the number of units sold. 20% increase in the direct material unit cost. 15% increase in the direct labor cost per unit. 10% increase in the manufacturing overhead cost per unit. 20% increase in the sales price. 7% increase in the administrative expenses. Rerun does not keep any units in inventory. The composition of the cost of finished products during 2019 for direct materials, direct labor, and factory overhead, respectively, was in the ratio of 3:2:1. The condensed income statement for 2019 is as follows: Sales (37,000 units) $518,000 Less sales returns 25,900 492,100 313,000 Net sales Cost of Goods Sold Gross Profit $179,100 $ 67,000 Selling Expenses Admin. Expenses 37,000 104,000 Net Income $ 75,100 What are estimated net sales for 2020, assuming the sales return/gross sales relationship remains constant? Multiple Choice $767,676. $685,425. $721,500. $718,900.

Rerun Manufacturing Company is in the process of preparing its 2020 budget and is anticipating the following changes: 30% increase in the number of units sold. 20% increase in the direct material unit cost. 15% increase in the direct labor cost per unit. 10% increase in the manufacturing overhead cost per unit. 20% increase in the sales price. 7% increase in the administrative expenses. Rerun does not keep any units in inventory. The composition of the cost of finished products during 2019 for direct materials, direct labor, and factory overhead, respectively, was in the ratio of 3:2:1. The condensed income statement for 2019 is as follows: Sales (37,000 units) $518,000 Less sales returns 25,900 492,100 313,000 Net sales Cost of Goods Sold Gross Profit $179,100 $ 67,000 Selling Expenses Admin. Expenses 37,000 104,000 Net Income $ 75,100 What are estimated net sales for 2020, assuming the sales return/gross sales relationship remains constant? Multiple Choice $767,676. $685,425. $721,500. $718,900.

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter16: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 18E: Carmichael Corporation is in the process of preparing next years budget. The pro forma income...

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