The Tub in Your Home Company THC) builds the highest quality bathrooms in the ho

Question

The Tub in Your Home Company THC) builds the highest quality bathrooms in the homebuilding business. TIHYC is a subcontractor that usually works "undeneath the general contractor. TTYHC constructs bathrooms components purchased outside. The costs (value) added by TIYHC are indirect costs (which include assembly labor), storage, and transportation. TTYHC constructs two types of bathrooms: standard and deluxe. The cost behavior of TIYHC is as follows: Deluxe bathroom Standard bathroom Indirect Costs $800 per component 540,000 Slá.percomponent $4 per bathroom 2 per bathroom Both the standard and deluxe bathrooms require 5 components: toilets, bathtubs, sinks, showers, and cabinets. Therefore, the total cost of deluxe bathrooms is $4,000 and total cost of standard bathrooms is $2,000. TYHC uses a six-month continuous budget that is revised monthly. Sales forecasts for the next eight months are as follows: Deluxe October 400 batihrooms 300 700 400 400 300 300 350 320 bathrooms 320 320 240 240 280 anuary March April Treat each event that follows in succession. 1. Using Excel prepare a table of budgeting information and an operating expense budget for TYHC for October through March. Incorporate the expectation that sales of the standard bathrooms will be 125% of deluxe bathrooms. Prepare a epreadsheet that can be revised easily for succeeding months. 2. October's actual sales were 280 deluxe bathrooms and 360 standard bathrooms. This outcome has caused TYHC to revise its sales forecast downward by 10%. Revise the operating expense budget for November through April. 3. At the end of November, TYHC decides that the proportion of deluce to standard bathrooms in its sales mix is changing. Sales of standard bathrooms are expected to be 150% of deluxe bathroom sales. Expected sales of deluxe bathrooms are unchanged from Part 2. Revise the operating expense budget for December through May.

Explanation / Answer

1 October November December January February March Deluxe Standard Deluxe Standard Deluxe Standard Deluxe Standard Deluxe Standard Deluxe Standard Sales volume 320 400 240 300 560 700 320 400 320 400 240 300 (No.of bathrooms) Component 1280000 800000 960000 600000 2240000 1400000 1280000 800000 1280000 800000 960000 600000 Indirect costs 65600 72000 59200 64000 84800 96000 65600 72000 65600 72000 59200 64000 Storage 9280 9600 8960 9200 10240 10800 9280 9600 9280 9600 8960 9200 Transportation 8640 8800 8480 8600 9120 9400 8640 8800 8640 8800 8480 8600 Total operating costs 1363520 890400 1036640 681800 2344160 1516200 1363520 890400 1363520 890400 1036640 681800 Explanations: Component No.of B/R*5*800 No.of B/R*5*400 2 November December January February March April Deluxe Standard Deluxe Standard Deluxe Standard Deluxe Standard Deluxe Standard Sales volume 216 270 504 630 288 360 288 360 216 270 216 270 (No.of bathrooms) Component 864000 540000 2016000 1260000 1152000 720000 1152000 720000 864000 540000 864000 540000 Indirect costs 57280 61600 80320 90400 63040 68800 63040 68800 57280 61600 57280 61600 Storage 8864 9080 10016 10520 9152 9440 9152 9440 8864 9080 8864 9080 Transportation 8432 8540 9008 9260 8576 8720 8576 8720 8432 8540 8432 8540 Total operating costs 938576 619220 2115344 1370180 1232768 806960 1232768 806960 938576 619220 938576 619220 2 November December January February March April Deluxe Standard Deluxe Standard Deluxe Standard Deluxe Standard Deluxe Standard Sales volume 216 324 504 756 288 432 288 432 216 324 216 324 (No.of bathrooms) Component 864000 648000 2016000 1512000 1152000 864000 1152000 864000 864000 648000 864000 648000 Indirect costs 57280 65920 80320 100480 63040 74560 63040 74560 57280 65920 57280 65920 Storage 8864 9296 10016 11024 9152 9728 9152 9728 8864 9296 8864 9296 Transportation 8432 8648 9008 9512 8576 8864 8576 8864 8432 8648 8432 8648 Total operating costs 938576 731864 2115344 1633016 1232768 957152 1232768 957152 938576 731864 938576 731864

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