Calculate Glidden’s budgeted net income for 2023.   2.Assuming that the sales mix stays as budgeted, calculate how many units of each product Glidden must sell to break even in 2023.   3.Calculate the total dollar sales Glidden must sell in 2023 to earn an after tax income of $ 450,000.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Problem 1

Glidden Company manufactures a line of chocolate bars that are sold in various department and grocery stores. The company’s controller has just received the sales forecast for the coming year for Glidden Company’s three products which are the High Protein, High Sugar and No Sugar chocolate bars. Glidden has experienced large fluctuations in sales volumes and variable costs over the past two years and the controller believes the sales forecast should be carefully evaluated from a CVP perspective. Preliminary budget information for 2023 is as follows:

High Sugar High Protein No Sugar

Unit sales 100,000 100,000 200,000

Unit selling price $ 48 $ 56 $ 68

Variable manufacturing cost per unit $ 11 $ 10 $ 21

Variable selling cost per unit $ 7 $ 6 $ 10

For 2023, Glidden’s fixed factory overhead is budgeted at $ 2,000,000 and the company’s fixed, selling and administrative expenses are forecasted to be $ 600,000. Glidden’s income tax rate is 40%.

 

Required: (Show all calculations. Round to the nearest whole unit or dollar)

1.Calculate Glidden’s budgeted net income for 2023.

 

2.Assuming that the sales mix stays as budgeted, calculate how many units of each product Glidden must sell to break even in 2023.

 

3.Calculate the total dollar sales Glidden must sell in 2023 to earn an after tax income of $ 450,000.

 

4.After preparing the original cost estimates, Glidden determined that its variable manufacturing cost of No Sugar chocolate bars would increase $4 per unit and the variable cost of selling High Protein chocolate bars could be expected to increase $ 1 per unit. However, Glidden has decided not to change the selling price of either product. Also, Glilden has learned its No Sugar bars has been perceived as the best value of the market and it can be expected to sell three times as many No Sugar bars as any other product. Under these circumstances, calculate how many units of each product Gllidden would have to sell to breakeven in 2023.

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