Violet Sales Corp, reports the year-end information from 2019 as follows:

Violet is developing the 2019 budget. In 2019 the company would like to increase selling prices by 3.5%, and as a result expects a decrease in sales volume of 14%. 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 cost of goods sold for 2019?

Question

Violet Sales Corp, reports the year-end information from 2019 as follows:

Violet is developing the 2019 budget. In 2019 the company would like to increase selling prices by 3.5%, and as a result expects a decrease in sales volume of 14%. 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 cost of goods sold for 2019?

Quizplus · Accepted Answer

Budgeted cost of goods sold = $106,000 × 0.86 = $91,160

Violet Sales Corp, Reports the Year-End Information from 2019 as Follows