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Unformatted text preview: Phase 4 Budgeting (DB2) by Rodney.JeanBaptiste on 1/5/2007 6:23:39 AM Reply to Message | Reply to Forum | Print | Save | Email Discuss the created budgets of the worst-case, most-likely, and best-case scenarios. Include a justification of your numbers based on the 2003–2005 performance. For each type of budget, include in your answer: • amounts for sales • cost of sales • expenses • inventory levels In your own words, please post a response to the Discussion Board and comment on other postings. You will be graded on the quality of your postings. © Copyright 2006 Colorado Technical University Online. All Rights Reserved. Phase 4 Budgeting (DB2) by Alice.Hess on 2/3/2007 10:54:39 PM Reply to Message | Reply to Forum | Print | Save | Email Alice Hess ACC345-0701A-01: Cost Accounting Phase 4-Budgeting DB2 Prof. Dr. Rodney Jean Baptiste In the worst case scenario, we assume that there is a drought or some other severe weather conditions that prevent us from harvesting as many oranges as we would want to. Consequently numbers of oranges produced dramatically go down by 2,000,000 oranges on average. That in turn means that the number of gallons produced would go down by approximately 130,000 and 60,000 for 2 product lines respectively. That in turn would bring the amount of sales down since we cannot sell more than we actually have. We also assume that the minimal wage has been increased and consequently we need to pay to our workers 20 cents more per each gallon produced. Hence the labor component would increase, making the total production cost higher. We try to accommodate all that increase in the production expense by increasing the product price; however we cannot do it infinitely since we need to maintain competitiveness. Yet, even in this case scenario we strive to maintain a monthly supply of both products for our customers (retailers). In the best case scenario, we assume that there the weather conditions are perfect we are going to harvest more oranges than any other competitor. Numbers of oranges produced would go up by 2,000,000 oranges on average. Consequently numbers of oranges produced dramatically go up by approximately 130,000 and 60,000 for 2 product lines respectively. That in turn means that the number of gallons produced would go up. We preserve the minimal wage; consequently we need to pay the same amount to our workers. Hence the labor component would remain the same. Production overhead could be reduced a bit (assume we found new equipment to process oranges), making the total production cost lower. Due to all those positive trends, we make keep the product price and even possibly increase our competitiveness by reducing them later. Yet we would remain highly profitable....
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This note was uploaded on 11/05/2011 for the course ACCOUNTING 101 taught by Professor Online during the Spring '11 term at Colorado Technical University.
- Spring '11