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Question 11 pts

To put together the Sales budget we need to predict three things, the units, when the sales will occur, and what else?

 

Question 21 pts

Which budget must be done before the other in the budgeting process the materials budget or the cost of goods sold budget?

 

Question 31 pts

Which budget must be completed before the other in the budgeting process the labor budget or the production budget?

 

Question 41 pts

At the beginning of the year we put together a Static or Master budget calling for us to sell 10,000 units. After the year is over, we sold 9,000 units. Assume that we stayed in our relevant range of between 8,000 and 15,000 units. What should happen to total variable labor costs for the year?

 

Question 51 pts

At the beginning of the year we put together a Static or Master budget calling for us to sell 10,000 units. After the year is over, we sold 12,000 units. Assume that we stayed in our relevant range of between 8,000 and 15,000 units. What should happen to the fixed utility costs?

 

Question 61 pts

Part 1 of 4: We are evaluating the introduction of a new product with significant features that we believe the customers will like and will be willing to pay a premium to the price of our current product. To be safe, we will not discontinue the sale of the older product until demand diminishes and the old product is replaced by the sales of the new product. We will however see a decrease in sales of the old product?

 

Question 71 pts

Part 2 of 4: Using the situation described in the previous problem, assume that we will need to advertise the availability of the new product and we expect this cost to increase our annual advertising budget from presently $60,000 to new level of $100,000 to include the advertising for the new product. Is this a relevant cost, and if so, how much new or additional advertising expense would you assign to the new product and would this be a positive or negative cash flow?

 

Question 81 pts

Part 3 or 4: Continuing with this same situation as the previous question, assume that current factory overhead is $150,000 per year but after the new product is introduced, the factory overhead will increase to $250,000 because the new product requires addition procedures.   How much (if any) of the factory overhead should be modeled with the new product?  Would this be modeled as a positive or negative cash flow?

 

 

Question 91 pts

Part 4 of 4: Continuing with this example, how would you model the additional sales from the new product?  Would this be modeled as a positive or negative cash flow?

 

Question 101 pts

Why are qualitative factors important in the evaluation of a new product or project?

 

 

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