Question
Number 5
Solve A - F
Based on the information given above, answer the following Cost-Vol ume-Profit Analysis questions Based on the information given above, complete the follo budget requirements: wing Master 1. Please list all amounts (Sales and Expenses) as constants, whether 5. Assume XYZ, Inc. sells 3,450 units in 2017, prepare the Sales, In- the per unit of total amount (i.e., if an amount is constant as per unit amount, calculate it as per unit amount, if constant at the total amount, do likewise ventory Purchases, and Selling & Administration Expense budgets based on the following additional assumptions a. Prepare the Master Budget for 2017 (i.e., only one unit Fer Unit amount, 3,450 units) work b. Use the Sales, Net price for budgeting purposes, this al Sales Gross 110.00 2.500 lows us to ignore the impact of Sales Discounts and Sales Returns & Allowances in the Master Budget. Sales Discoait $0.50 Sales Retams& Allowances 2500 Sales, Net 2500 $107.00 c. Assume that 90% of all Sales, Net will be received in cash during the year, the remainder will be Accounts Receiv- able. Accounts Receivable at the end of 2016 is $25,000. Cost of Goods Sold Variable) d. For Inventory Purchases, assume a Desired Ending In- 2500- 2.500 ventory amount of 400 units for 2017. Ignore discounts and return for the Master Budget. A total of 290 units were still in Inventory at the end of 2016. Seilng Expesse (VwtaNe) 2.500 7.70 2500 2500 2500 Admanistrative Expenses (Vriable) $5.50 2.500 43 25000 $26 250 e. Assume that 85% of all purchases will be paid in cash Met Income during the year, the remainder will be Accounts Paya- ble. Accounts Payable at the end of 2016 is $27,500. 2. What is XYZ, Inc.'s Contribution Margin per unit? Contribution Margin per Unit f. All Selling (Marketing) and Administrative amounts can - selling price per unit - variable cost per unit go in the same Expenditure Budget. This will include the variable amounts related to selling and administra- tive, as well as the fixed amounts. Contribution Margin per Unit $107- $79.20 $27.80 3. What is XYZ, Inc.'s Breakeven Point in Units? $43,250 $27.80 1,555.75 units Breakeven Point in Units = 4. If XYZ, Inc. wants to increase yearly profit to $50,000, how many units do they need to sell? Net Increase in Profit $50,000 $26,250 $23,750 Fixed Cost = $43,250 Number of Units to Sell for the Target Profit (Fixed Cost +Target Profit) Contribution Margin per Unit ($43,250$50,000) $93,250 $27.80 Number of Sales Units = $27.80 3,354.32 units
Explanation / Answer
XYZ Inc, Master Budget for 2017 Sales Budget 369150 =(3450*107) Inventory Purchase Budget Cost of goods purchased Ending Inventory 26400 =400*66 Add : cost of goods sold 227700 =3450*66 Goods available for sale 254100 Less : Beginning Inventory 19140 =290*66 Cost of goods purchased 234960 Expenditure Budget Selling expenses 26565 =3450*7.7 Administrative expenses 18975 =3450*5.5 Selling & administrative expenses(Fixed) 43250 Total Selling & administrative expenses 88790
