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
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

electron control,inc.,cells voltage regulators to other manufacturers , who then customize and distribute the products to quality assurance labs for their sensitive test equipment.

The only road connecting two populated islands is currently a freeway. During rush hour, there is congestion because of the heavy traffic. The marginal external cost from congestio

A risk-neutral agent's working life has two periods. In each period, the agent can provide high effort (at personal cost $2,000) or low effort (at zero personal cost). In a given p

The pigou effect, also called the real balance effect, is named after the well known Cambridge school economist Arthur Cecil pigou who had first clearly formulated the relationship

Difficulties in using fiscal policy There are several problems involved in implementing fiscal policy.  They include: Theoretical problems Monetarists and the Keynesia

How does economic theory contribute to managerial decisions?

Suppose that the price elasticity of demand for cereal is -0.75 and the cross-price elasticity of demand between cereal and the price of milk is -0.9. If the price of milk rises by

Q. Explain about Managerial Economies? Large scale production makes possible the division of managerial functions. So there exists a production manager, a finance manager, asal

Ajax has the following short run cost curve when tc=800000-5000Q+100Q2