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Cost Accounting Essay

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AC552
Week 4 Homework

Please complete the below problems and submit your answers in the Week 4 Drop Box.   See "Syllabus/Due Dates for Assignments & Exams" for due date information.
1. Martin & Sons, a small door manufacturer, sold 4,600 white six-panel doors for \$130 each and 2,400 unfinished six-panel doors for \$100 each.   Mr. Martin feels that because home-owners are doing more themselves and the economy is down, that they may see an increase of 15% in sales of unfinished six-panel doors in 2012 and a corresponding 10% decrease in sales of white six-panel doors.   He wonders if he lowered the price of the white six-panel doors to \$120 each, that he may only see an 8% decline in sales of white six-panel doors and the corresponding increase in unfinished six-panel doors.
Required:
1. Prepare a 2012 sales budget assuming that Martin & Sons holds prices at the current level and sales quantity remains at the 2011 level.
White Six-Panel Doors: 4600 * \$ 130 = \$ 598,000
Unfinished Six-Panel Doors: 2,400 * \$ 100 = \$ 240,000
Total: \$ 838,000
2. Prepare a 2012 sales budget assuming that Martin & Sons holds prices at the current level and the decrease in white six-panel doors is realized as is the increase in unfinished six-panel doors.
White Six-Panel Doors: (4600 – 460) * \$ 130 = 4,140 * \$ 130 = \$ 538,200
Unfinished Six-Panel Doors: (2,400 + 360) * \$ 100 = 2,760 * \$ 100 = \$ 276,000
Total: \$ 814,200
3. Prepare a 2012 sales budget assuming that Martin & Sons lowers the price of white six-panel doors to \$120 each and the decline in sales is as anticipated.
White Six-Panel Doors: (4600 – 368) * \$ 120 = 4,232 * \$ 120 = \$ 507,840
Unfinished Six-Panel Doors: (2,400 + 288) * \$ 100 = 2,688 * \$ 100 = \$ 268,800
Total: \$ 776,640

4. Should Martin & Sons lower the price of the white six-panel doors to \$120 each?
No, because they would see lower sales with a difference of \$ 37,560. They will have \$ 37,560 more in sales if they did not change the price.
5. Suppose...

• Submitted by: asifmaredia
• on September 21, 2012
• Length: 745 words
• Views: 753
• Popularity Rank: 55667
• 1 rating(s)

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