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Chapter 2: 6BP (page 114)

Cyber Security Systems had sales of 3,500 units at $75 per unit last year. The marketing manager projects a 30 percent increase in unit volume sales this year with a 40 percent price increase. Returned merchandise will represent 8 percent of total sales. What is your net dollar sales projection for this year?

Short Answer

Expert verified

The net dollar sale projection of the company for this year is $439,530.

Step by step solution

01

Increase in units sold

Increasedunitssold=Currentunitssold脳1+Incriment=3,500脳1+0.30=4,550

02

Increase in unit price

Increaseinunitprice=Unitprice脳1+Incriment=$75脳1+0.40=$105

03

Increased sales volume

Salesvolume=Increasedunitssold脳Increasedunitprice=4,550脳$105=$477,750

04

Returned merchandise

Returnedmerchandise=Totalsalesvolume脳Returnpercentage=$477,750脳8%=$38,220

05

Net dollars sales projections of the company for this year

Netdollarsalesprojection=Totalsalesvolume-Returnedmerchandise=$477,750-$38,220=$439,530

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Most popular questions from this chapter

Wright Lighting Fixtures forecasts its sales in units for the next four months as follows:

March

4,000

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10,000

May

8,000

June

6,000

Wright maintains an ending inventory for each month in the amount of one and one-half times the expected sales in the following month. The ending inventory for February (March鈥檚 beginning inventory) reflects this policy. Materials cost \(7 per unit and are paid for in the month after production. Labor cost is \)3 per unit and is paid for in the month incurred. Fixed overhead is \(10,000 per month. Dividends of \)14,000 are to be paid in May. Eight thousand units were produced in February.

Complete a production schedule and a summary of cash payments for

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For December 31, 20X1, the balance sheet of Baxter Corporation was as follows:

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\(15,000

Accounts payable

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Accounts receivable

20,000

Notes payable

25,000

Inventory

30,000

Bonds payable

55,000

Prepaid expenses

12,500

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Sales for 20X2 were \)245,000, and the cost of goods sold was 60 percent of sales. Selling and administrative expense was \(24,500. Depreciation expense was 8 percent of plant and equipment (gross) at the beginning of the year. Interest expense for the notes payable was 10 percent, while the interest rate on the bonds payable was 12 percent. This interest expense is based on December 31, 20X1 balances. The tax rate averaged 20 percent.

\)2,500 in preferred stock dividends were paid, and \(5,500 in dividends were paid to common stockholders. There were 10,000 shares of common stock outstanding.

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a. Prepare an income statement for 20X2.

The Lancaster Corporation鈥檚 income statement is given below.

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\(246,000

Cost of goods sold

122,000

Gross profit

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Fixed charges (other than interest)

27,500

Income before interest and taxes

\(96,500

Interest

21,800

Income before taxes

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Taxes (35%)

26,145

Income after taxes

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