Kern Company prepared the following tentative budget for next year: $$\begin{array} { | l | l | }
\hline \text { Sales } & \$ 500,000 \
\hline \text { Selling price } & \$ 5 \text { per unit } \
\hline \text { Variable expenses } & \$ 300,000 \
\hline \text { Fixed expenses } & \$ 150,000 \
\hline
\end{array}$$ The sales manager argues that the unit selling price could be increased by 20%, with an expected volume decrease of only 10%. If Kern incorporates these changes in its budget, what should be the budgeted net income?

Question

Kern Company prepared the following tentative budget for next year: $$\begin{array} { | l | l | } 
\hline \text { Sales } & \$ 500,000 \
\hline \text { Selling price } & \$ 5 \text { per unit } \
\hline \text { Variable expenses } & \$ 300,000 \
\hline \text { Fixed expenses } & \$ 150,000 \
\hline
\end{array}$$ The sales manager argues that the unit selling price could be increased by 20%, with an expected volume decrease of only 10%. If Kern incorporates these changes in its budget, what should be the budgeted net income?

Quizplus · Accepted Answer

The Answer of Kern Company prepared the following tentative budget for next year: $$\begin{array} { | l | l | } 
\hline \text { Sales } & \$ 500,000 \
\hline \text { Selling price } & \$ 5 \text { per unit } \
\hline \text { Variable expenses } & \$ 300,000 \
\hline \text { Fixed expenses } & \$ 150,000 \
\hline
\end{array}$$ The sales manager argues that the unit selling price could be increased by 20%, with an expected volume decrease of only 10%. If Kern incorporates these changes in its budget, what should be the budgeted net income?

Kern Company Prepared the Following Tentative Budget for Next Year