Evergreen Corporation manufactures circuit boards and is in the process of preparing next year's budget. The pro forma income statement for the current year is presented below. Sales $ 3,500,000 Cost of sales: Direct Material $ 500,000 Direct labor 250,000 Variable Overhead 275,000 Fixed Overhead 600,000 1,625,000 Gross Profit $ 1,875,000 Selling and General & Admin. Exp. Variable 750,000 Fixed 250,000 1,000,000 Operating Income $ 875,000For the coming year, the management of Evergreen Corporation anticipates a 5 percent decrease in sales, a 10 percent increase in variable costs, and a $45,000 increase in fixed costs. The break-even point for next year would be: $2,668,750. $2,947,500. $3,022,500. $2,168,225.
Evergreen Corporation manufactures circuit boards and is in the process of preparing next year's budget. The pro forma income statement for the current year is presented below. Sales $ 3,500,000 Cost of sales: Direct Material $ 500,000 Direct labor 250,000 Variable Overhead 275,000 Fixed Overhead 600,000 1,625,000 Gross Profit $ 1,875,000 Selling and General & Admin. Exp. Variable 750,000 Fixed 250,000 1,000,000 Operating Income $ 875,000For the coming year, the management of Evergreen Corporation anticipates a 5 percent decrease in sales, a 10 percent increase in variable costs, and a $45,000 increase in fixed costs. The break-even point for next year would be: $2,668,750. $2,947,500. $3,022,500. $2,168,225.
Financial And Managerial Accounting
15th Edition
ISBN:9781337902663
Author:WARREN, Carl S.
Publisher:WARREN, Carl S.
Chapter19: Support Department And Joint Cost Allocation
Section: Chapter Questions
Problem 2CMA: Adam Corporation manufactures computer tables and has the following budgeted indirect manufacturing...
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
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Evergreen Corporation manufactures circuit boards and is in the process of preparing next year's budget. The pro forma income statement for the current year is presented below.
For the coming year, the management of Evergreen Corporation anticipates a 5 percent decrease in sales, a 10 percent increase in variable costs, and a $45,000 increase in fixed costs.
The break-even point for next year would be:
| Sales | $ | 3,500,000 | |||
| Cost of sales: | |||||
| Direct Material | $ | 500,000 | |||
| Direct labor | 250,000 | ||||
| Variable Overhead | 275,000 | ||||
| Fixed Overhead | 600,000 | 1,625,000 | |||
| Gross Profit | $ | 1,875,000 | |||
| Selling and General & Admin. Exp. | |||||
| Variable | 750,000 | ||||
| Fixed | 250,000 | 1,000,000 | |||
| Operating Income | $ | 875,000 |
The break-even point for next year would be:
|
$2,668,750.
|
||
|
$2,947,500.
|
||
|
$3,022,500.
|
||
|
$2,168,225.
|
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