Author Question: Advanced Enterprises reports year-end information from 2018 as follows: Sales (161,000 ... (Read 99 times)

Mr.Thesaxman · **on:** Mar 6, 2021

Question 1

Explain what is meant by sensitivity analysis in budgeting, and discuss how managers might use sensitivity analysis in practice.

Question 2

Advanced Enterprises reports year-end information from 2018 as follows:

Sales (161,000 units)

$961,000

Cost of goods sold

644,000

Gross margin

317,000

Operating expenses

264,000

Operating income

$53,000

Advanced is developing the 2019 budget. In 2019 the company would like to increase selling prices by 13.5%, and as a result expects a decrease in sales volume of 9%. All other operating expenses are expected to remain constant. Assume that cost of goods sold is a variable cost and that operating expenses are a fixed cost.

What is budgeted sales for 2019?
◦ $1,090,735
◦ $961,000
◦ $992,569
◦ $874,510

cassie_ragen · **Reply #1 on:** Mar 6, 2021

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