Rerun manufacturing company is in the process of preparing its 2016 budget and is anticipating the following changes:
30% increase in the number of units sold.
20% increase in the direct material unit cost.
15% increase in the direct labor cost per unit.
14% increase in the manufacturing overhead cost per unit.
18% increase in the marketing price.
4% increase in the administrative expenses.
rerun does not keep any units in inventory.
the composition of the cost of finished products during 2016 for materials, direct labor, and factory overhead, respectively, was in the ratio of 3: 2: 1. the condensed income statement for 2016 is as follows:
sales (50,000 units) $ 550,000
less sales returns 27,500
net sales 522,500
cost of goods sold 326,000
gross profit $196,500
selling expenses $80,000
admin. expenses 50,000 130,000
net income $66,500
what are estimated net sales for 2016, assuming the sales return/gross sales relationship remains constant?
(a) $801,515.
(b) $975,000.
(c) $736,929.
(d) $677,950.
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