Business
Business, 19.03.2020 09:32, 1Angel2Got3Brains

Cincinnati Tool Company (CTC) manufactures a line of electric garden tools that are sold in general hardware stores. The company’s controller, Will Fulton, has just received the sales forecast for the coming year for CTC’s three products: hedge clippers, weeders, and leaf blowers. CTC has experienced considerable variations in sales volumes and variable costs over the past two years, and Fulton believes the forecast should be carefully evaluated from a cost-volume-profit viewpoint. The preliminary budget information for 20x2 follows:

Weeders Hedge Clippers Leaf Blowers Unit sales
Unit Sales 50,000 50,000 100,000
Unit selling price $28 $36 $48
Variable manufacturing-
cost per unit 13 12 25
Variable selling cost-
per unit 5 4 6

For 20x2, CTC’s fixed manufacturing overhead is budgeted at $2,000,000, and the company’s fixed selling and administrative expenses are forecasted to be $600,000. CTC has a tax rate of 40 percent.
Required:
1. Determine CTC’s budgeted net income for 20x2.
2. Assuming the sales mix remains as budgeted, determine how many units of each product CTC must sell in order to break even in 20x2.

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Cincinnati Tool Company (CTC) manufactures a line of electric garden tools that are sold in general...

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