MSRP $5.39 $4.99 Volume Discount 35% 35% Unit Cost $1.49 $1.49 Promotional Allowance 15% 20% Advertising and Promotion $25 Million $20 Million Allocated Fixed Costs $68 M $12 M Projected Unit Sales 115M 10M A firm has an existing product with a combined advertising and promotion budget of $25.0 million and with projected sales of 115 million units. They are launching a new product with a budget of $20.0 million and estimated sales of 10 million units in the first year. The sales force expense of $10 million has been allocated equally between products; 90% of the plant overhead has been allocated to the existing product, and 10%, to the new product. Additional values for each product are shown in the table above. 1. Production anticipates it will need to increase capacity to 140 million units, adding $10.0 million to annual fixed costs. If the product allocation of the plant cost is also changed to 80%/20%, what is the impact on break-even units? Please use the chart below to record your answer. Existing Product New Prouct Total Fixed Cost Unit Selling Price Unit Variable Cost Beak-Even Units
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
| MSRP | $5.39 | $4.99 |
| Volume Discount | 35% | 35% |
| Unit Cost | $1.49 | $1.49 |
| Promotional Allowance | 15% | 20% |
| Advertising and Promotion | $25 Million | $20 Million |
| Allocated Fixed Costs | $68 M | $12 M |
| Projected Unit Sales | 115M | 10M |
A firm has an existing product with a combined advertising and promotion budget of $25.0 million and with projected sales of 115 million units. They are launching a new product with a budget of $20.0 million and estimated sales of 10 million units in the first year. The sales force expense of $10 million has been allocated equally between products; 90% of the plant
1. Production anticipates it will need to increase capacity to 140 million units, adding $10.0 million to annual fixed costs. If the product allocation of the plant cost is also changed to 80%/20%, what is the impact on break-even units? Please use the chart below to record your answer.
| Existing Product | New Prouct | |
| Total Fixed Cost | ||
| Unit Selling Price | ||
| Unit Variable Cost | ||
| Beak-Even Units |
|
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