Budget planning, Managerial Economics

they manufacture a single product, specialty curry sauce. They are interested in developing 12 MONTH budget models and want to perform decision analysis on this model. Curryrus.com has approached you for help.

The following information is available:

1. Curryrus.com sells ONE product, specialty curry sauce, at a price of $11 a unit. The price will remain fixed for the next year (2012).

2. Sales will average 5500 units per month from Jan to May, 2012. Starting June 1 sales will increase by 5% each month thereafter.

3. Cost of production involves materials and labor costs. (based on units produced and NOT units sold)

o Material costs are $1.00/unit

o Direct labor costs are $ 0.50/unit until end of June and then will increase 5% (monthly) thereafter..

4. Production will be constant at 6000 units/month.

5. Inventory at the beginning of the year, January 1, 2012 will be 3000 units.

6. Inventory carrying costs are $4/end of the month inventory units., i.e., if there are 5000 units at the end of January, inventory carrying cost will be 5000*4=$20,000 and will be charged as inventory carrying cost for January. (this is an example, you need to calculate end of January inventory using following formula)

end of the month inventory= Beginning inventory of the month + Production for that month - sales for that month

(Note: Beginning inventory of a given month is the same as ending inventory of the previous month)

7. The following operating expenses are also projected:

• Advertising expense: $1000 the first month and 2.5% of the previous month's GROSS SALES (unit price * monthly sales), in dollars thereafter.

• Administrative salaries are $15,000 per month

• Company has a lease on its factory in Beijing which costs $500 per month

8. Curryrus.com expects tax rate to be 30% in 2012.

Note: All increases are incremental. i.e., if there is 10% increase in sales starting February and there after, then

February sales will be January sales + 10 % increase of January sales

March sales will be February sales + 10% increase of February sales etc.

Posted Date: 3/26/2013 5:17:42 AM | Location : United States







Related Discussions:- Budget planning, Assignment Help, Ask Question on Budget planning, Get Answer, Expert's Help, Budget planning Discussions

Write discussion on Budget planning
Your posts are moderated
Related Questions
present a detailed discussion of the principles of managerial economics

The use of arc elasticity in economic analysis involves a good deal of chariness since it is capable of being misinterpreted. Arc elasticity coefficients vary between the same two

Controller of Credit The principles of credit control by the central bank were discovered and enunciated after the publication of Bagehot Lombard street in 1873. Even after 187

(Kinky Demand Curve) Short Period Kinked demand curve was first used by Prof. Paul M. Sweezy to elucidate price rigidity under oligopoly. In an oligopoly market, firm knows that

Discount Rate (Bank Rate) This is the rate on central bank advances and is also called official discount rate or "minimum lending rate".  When commercial banks find themselves

Using the relationship among the price of a visit to a physiotherapist and the quantity of visits demanded, explain and distinguish between the direction, the slope, and the positi

when firm can achieve optimization

isoquant and its properties

Q. What is Technical Economies? The significant technical economies result from the use of specialised capital equipment that comes into effect only when output is produced on

Factors influencing the supply of a commodity a)         Own Price of the commodity There is a direct relationship between quantity supplied and the price so that the hig