Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Chapter 8, Problem 18E

Audio-2-Go, Inc., manufactures MP3 players. Models A-1, A-2, and A-3 are small and light. They are attached to armbands and use flash memory. Models A-4 and A-5 are somewhat larger and use a built-in hard drive; they can be put into fanny packs for use while working out. It is now early January, and Audio-2-Go’s budgeting team is finalizing the sales budget for this year. Sales in units and dollars for last year were as follows:

Chapter 8, Problem 18E, Audio-2-Go, Inc., manufactures MP3 players. Models A-1, A-2, and A-3 are small and light. They are

In looking over last year’s sales figures, Audio-2-Go’s sales budgeting team recalled the following:

  1. a. Model A-1 costs were rising faster than the price could rise. Preparatory to phasing out this model, Audio-2-Go, Inc., planned to slash advertising for this model and raise its price by 30 percent. The number of units of Model A-1 to be sold was forecast to be 50 percent of last year’s units.
  2. b. Model A-5 was introduced on November 1 of last year. It contains a built-in 20 GB hard drive and can be synchronized with several popular music software programs. Audio-2-Go brought out this model to match competitors’ audio players, but the price is so much higher than other Audio-2-Go products, that sales have been disappointing. The company plans to discontinue this model on June 30 of this year, and thinks that monthly sales will remain at last year’s level if the sales price remains unchanged.
  3. c. Audio-2-Go plans to introduce Model A-6 on July 1 of this year. It will be a high-end player that will be lighter and more versatile than Model A-5 (which it will replace). The target price for this model is $180; unit sales are estimated to equal 2,500 per month.
  4. d. A competitor has announced plans to introduce an improved version of Model A-3. Audio-2-Go believes that theModelA-3 price must be cut 20 percent to maintain unit sales at last year’s level.
  5. e. It was assumed that unit sales of all other models would increase by 10 percent, prices remaining constant.

Required:

Prepare a sales forecast by product and in total for Audio-2-Go, Inc., for this year.

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Audio-2-Go, Inc., manufactures MP3 players. Models A-1, A-2, and A-3 are small and light. They are attached to armbands and use flash memory. Models A-4 and A-5 are somewhat larger and use a built-in hard drive; they can be put into fanny packs for use while working out. It is now early January, and Audio-2-Go’s budgeting team is finalizing the sales budget for this year. Sales in units and dollars for last year were as follows: Model      Number Sold      Price      Revenue   A-1   23,000   $ 50     $1,150,000   A-2   38,000   85     3,230,000   A-3   55,000   100     5,500,000   A-4   13,000   120     1,560,000   A-5     4,500   220     990,000             $12,430,000 In looking over the last year's sales figures, Audio-2-Go’s sales budgeting team recalled the following: Model A-1 costs were rising faster than the price could rise. Preparatory to phasing out this model, Audio-2-Go, Inc., planned to slash advertising for this model and raise its price by 30 percent.…
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Chapter 8 Solutions

Cornerstones of Cost Management (Cornerstones Series)

Ch. 8 - Prob. 11DQCh. 8 - Discuss the shortcomings of the traditional master...Ch. 8 - Define static budget. Give an example that shows...Ch. 8 - What are the two meanings of a flexible budget?...Ch. 8 - What are the steps involved in building an...Ch. 8 - FlashKick Company manufactures and sells soccer...Ch. 8 - Refer to Cornerstone Exercise 8.1, through...Ch. 8 - Refer to Cornerstone Exercise 8.2 for the...Ch. 8 - Prob. 4CECh. 8 - Johnston Company cleans and applies powder coat...Ch. 8 - Play-Disc makes Frisbee-type plastic discs. Each...Ch. 8 - Refer to Cornerstone Exercise 8.6. Required: 1....Ch. 8 - Timothy Donaghy has developed a unique formula for...Ch. 8 - Green Earth Landscaping Company provides monthly...Ch. 8 - Coral Seas Jewelry Company makes and sells costume...Ch. 8 - Shalimar Company manufactures and sells industrial...Ch. 8 - Khloe Company imports gift items from overseas and...Ch. 8 - Nashler Company has the following budgeted...Ch. 8 - Refer to Cornerstone Exercise 8.13. In March,...Ch. 8 - Palmgren Company produces consumer products. The...Ch. 8 - Prob. 16ECh. 8 - Crescent Company produces stuffed toy animals; one...Ch. 8 - Audio-2-Go, Inc., manufactures MP3 players. Models...Ch. 8 - Tiger Drug Store carries a variety of health and...Ch. 8 - Rosita Flores owns Rositas Mexican Restaurant in...Ch. 8 - Prob. 21ECh. 8 - Janet Wooster owns a retail store that sells new...Ch. 8 - Historically, Ragman Company has had no...Ch. 8 - Del Spencer is the owner and founder of Del...Ch. 8 - Refer to Exercise 8.24. Del Spencers purchases...Ch. 8 - Ingles Corporation is a manufacturer of tables...Ch. 8 - In an attempt to improve budgeting, the controller...Ch. 8 - Refer to Exercise 8.27. At the end of the year,...Ch. 8 - Olympus, Inc., manufactures three models of...Ch. 8 - Refer to Exercise 8.29. Suppose Gene determines...Ch. 8 - Trumbull Co. plans to produce 100,000 toy cars...Ch. 8 - Which of the following describes the order in...Ch. 8 - A companys controller is adjusting next years...Ch. 8 - A companys sales for the coming months are as...Ch. 8 - The budget that adjusts unit sales for beginning...Ch. 8 - Ponderosa, Inc., produces wiring harness...Ch. 8 - Bernard Creighton is the controller for Creighton...Ch. 8 - Greiner Company makes and sells high-quality glare...Ch. 8 - Prob. 39PCh. 8 - The controller for Muir Companys Salem plant is...Ch. 8 - Refer to Problem 8.40 for data. Required: 1. Run a...Ch. 8 - Norton Company, a manufacturer of infant furniture...
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