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Author Question: Advanced Enterprises reports year-end information from 2018 as follows: Sales (161,000 ... (Read 104 times)

Mr.Thesaxman

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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 margin317,000
Operating expenses264,000
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
Horngren's Cost Accounting: A Managerial Emphasis ¦ Datar, Rajan ¦ 16th Edition
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Marked as best answer by Mr.Thesaxman on Mar 6, 2021

cassie_ragen

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Reply #1 on: Mar 6, 2021
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Mr.Thesaxman

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Reply 2 on: Mar 6, 2021
Thanks for the timely response, appreciate it

bigsis44

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Reply 3 on: Yesterday
Great answer, keep it coming :)

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