« previous next »

Author Question: In 2014, Rouse & Sons, a small environmental-testing firm, performed 12,200 radon tests for 290 ... (Read 13 times)

jCorn1234

  • Hero Member
  • *****
  • Posts: 545
on: Jul 6, 2018
In 2014, Rouse & Sons, a small environmental-testing firm, performed 12,200 radon tests for 290 each and 16,400 lead tests for 240 each.
 
  Because newer homes are being built with lead-free pipes, lead-testing volume is expected to decrease by 10 next year. However, awareness of radon-related health hazards is expected to result in a 6 increase in radon-test volume each year in the near future. Jim Rouse feels that if he lowers his price for lead testing to 230 per test, he will have to face only a 7 decline in lead-test sales in 2015.
 
  Required:
  1. Prepare a 2015 sales budget for Rouse & Sons assuming that Rouse holds prices at 2014 levels.
  2. Prepare a 2015 sales budget for Rouse & Sons assuming that Rouse lowers the price of a lead test to 230. Should Rouse lower the price of a lead test in 2015 if the company's goal is to maximize sales revenue?

Question 2

Which of the following is correct, assuming the following transaction: R. Dirk invested 20,000 cash in the business.
 a. Cash is debited.
  b. Cash is credited.
  c. R. Dirk, Capital is debited.
  d. Income from Services is credited.


uniquea123

  • Sr. Member
  • ****
  • Posts: 311
Reply #1 on: Jul 6, 2018
Answer to Question 1

1.
Rouse & Sons 2014 Volume At 2014
Selling Prices Expected 2015
Change in Volume Expected 2015 Volume
Radon Tests 12,200 290 + 6 12,932
Lead Tests 16,400 240 10 14,760

Rouse & Sons Sales Budget
For the Year Ended December 31, 2015

Selling Price Units Sold Total Revenues
Radon Tests 290 12,932 3,750,280
Lead Tests 240 14,760 3,542,400
7,292,680

2.
Rouse & Sons 2014 Volume Planned 2015 Selling Prices Expected 2015 Change in Volume Expected 2015 Volume
Radon Tests 12,200 290 +6 12,932
Lead Tests 16,400 230 7 15,252

Rouse & Sons Sales Budget
For the Year Ended December 31, 2015

Selling Price Units Sold Total Revenues
Radon Tests 290 12,932 3,750,280
Lead Tests 230 15,252 3,507,960
7,258,240

Expected revenues at the new 2015 prices are 7,258,240, which is lower than the expected 2015 revenues of 7,292,680 if the prices are unchanged. So, if the goal is to maximize sales revenue and if Jim Rouse's forecasts are reliable, the company should not lower its price for a lead test in 2015.

Answer to Question 2

A


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question

jCorn1234

  • Hero Member
  • *****
  • Posts: 545
Reply #2 on: Jul 6, 2018
Thank you


uniquea123

  • Sr. Member
  • ****
  • Posts: 311
Reply #3 on: Jul 6, 2018
No problemo


« previous next »
 

Did you know?

Alzheimer's disease affects only about 10% of people older than 65 years of age. Most forms of decreased mental function and dementia are caused by disuse (letting the mind get lazy).

Did you know?

Every 10 seconds, a person in the United States goes to the emergency room complaining of head pain. About 1.2 million visits are for acute migraine attacks.

Did you know?

More than 50% of American adults have oral herpes, which is commonly known as "cold sores" or "fever blisters." The herpes virus can be active on the skin surface without showing any signs or causing any symptoms.

Did you know?

One way to reduce acid reflux is to lose two or three pounds. Most people lose weight in the belly area first when they increase exercise, meaning that heartburn can be reduced quickly by this method.

Did you know?

A recent study has found that following a diet rich in berries may slow down the aging process of the brain. This diet apparently helps to keep dopamine levels much higher than are seen in normal individuals who do not eat berries as a regular part of their diet as they enter their later years.

Why Cells Are Small Why Cells Are Small
The cotton-top tamarin (Saguinus oedipus), also known as the Pinche tamarin, is a small New W The cotton-top tamarin (Saguinus oedipus), also known as the Pinche tamarin, is a small New W
Procedures for Diagnostic Tests Related to the Digestive System Procedures for Diagnostic Tests Related to the Digestive System
Cupping. Tapotement performed with the outside rim of a cupped hand. Cupping. Tapotement performed with the outside rim of a cupped hand.
Small Avocado vs Large Avocado Small Avocado vs Large Avocado
Testing near vision Testing near vision
Video: Introduction to Herpes

For a complete list of videos, visit our video library