Sitaram Company manufactures and sells adjustable canopies that attach to motor homes and trailers. The market covers both new unit purchasers as well as replacement canopies. Sitaram developed its 2019 business plan based on the assumption that canopies would sell at a price of ₹400 each. The variable costs for each canopy were projected to be ₹200, and the annual fixed costs were budgeted at ₹100,000. The goal for Sitaram's after-tax operating profits was ₹240,000; the company's effective tax rate is 40%. While Sitaram's sales usually rise during the second quarter, the May financial statements reported that sales were not meeting expectations. For the first five months of 2019, only 350 units had been sold at the established price, with variable costs as planned. It was clear that the 2019 after-tax operating profit goal would not be reached unless some corrective actions were taken. Sitaram's president assigned a management committee to analyse the situation and develop several alternative courses of action. The following mutually exclusive alternatives were presented to the president A. Reduce the selling price by ₹40. The sales organization forecasts that with the significantly reduced sales price, 2,700 units could be sold during the remainder of the year. Total fixed costs per annum and variable costs per unit will stay as budgeted. B. Lower the variable costs per unit by ₹25 through the use of less expensive materials and slightly modified manufacturing technique. The sales price will also be reduced by ₹30 and sales of 2,200 units for the remainder of the year are forecast. C. Cut fixed costs by ₹10,000 and lower the selling price by 5 percent. Variable costs per unit will be unchanged. Sales of 2,000 units would be expected for the remainder of the year.   Determine the number of units that Sitaram Company must sell in order to break even, assuming no changes are made to the selling price and cost structure.    400     450     500     550

Wildhorse Enterprises is a portable hot tub manufacturer. The company produces both 2-person and 4-person hot tubs. Chris Anderson, the company's sales manager, prepared the following sales forecast for 2021. The forecasted sales prices include a 5 percent increase in the 2-person spa price and a 10 percent increase in the 4-person spa price, to cover anticipated increases in raw materials prices. 2-person spa 4-person spa (a) on spas: Your answer is partially correct. geted sales price Prepare Wildhorse's sales budget for 2021. geted sales price ✓ il revenue on spas: Sales Price geted sales price geted sales price geted sales price v frevenue V $1,400 $2,700 V 1st Quarter 650 350 LA 1A 1st Quarter 2nd Quarter 910000 490000 1400000 DE 650 Units 250 3rd Quarter 550 250 2nd Quarter 4th Quarter 910000 350000 1260000 750 350 SA 3rd Quarter 1050000 490000 1540000 SA SA SA SA FA 1

Madetaylor Inc. manufactures financial calculators.  The company is deciding whether to introduce a new calculator.  This calculator will sell for $130.  The company feels that sales will be 18,000, 22,000, 24,000, 22,000, and 18,000 units annually for the next five years.  Variable costs will be 21% of sales, and fixed costs are $500,000 annually.  The firm hired a marketing team to analyze the product's viability, and the marketing analysis cost $1,250,000.  The company plans to manufacture and store the calculators in a vacant warehouse.  Based on a recent appraisal, the warehouse and the property are worth $2.5 million after tax.  If the company does not sell the property today, it will sell it five years from today at the currently appraised value.  This project will require an injection of net working capital at the onset of the project, $250,000.  The firm recovers the net working capital at the end of the project.  The firm must purchase equipment for $5,000,000 to produce the…

FEX, a grocery store, is considering offering one-hour photo developing in their store. The firm expects that sales from the new one-hour machine will be $139,000 per year. FEX currently offers overnight film processing with annual sales of $90,000. While FEX expects that many of the one-hour photo sales will be to new customers, it also expects that most of the old customers will switch to the new one-hour machine. Specifically, FEX estimates that 75% of their current overnight photo customers will switch and use the one-hour service. Given these expectations, the level of incremental sales associated with introducing the new one hour photo service is closest to O $206,500 O $36,300 O $71,500 $139,000 O $121,800 O $94,800

Coronado Enterprises is a boutique guitar manufacturer. The company produces both acoustic and electric guitars for rising and established professional musicians. Sharon Lee, the company’s sales manager, prepared the following sales forecast for 2022. The forecasted sales prices include a 5% increase in the acoustic guitar price and a 10% increase in the electric guitar price, to cover anticipated increases in raw materials prices.     Sales Price   1st Quarter   2nd Quarter   3rd Quarter   4th Quarter   Acoustic guitar sales   $1,250     240     270     310     340     Electric guitar sales   $2,100     400       350     320     360   On December 31, 2021, Coronado had 30 acoustic guitars in stock—fewer than the desired inventory level of 96 guitars, based on the following quarter’s sales. The company has budgeted for sales of 240 acoustic guitars in the first quarter of 2023. Prepare the 2022 production budget for acoustic guitars.   Production…

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