Kramer Enterprises reports year-end 2015 as follows:

Sales (160,000 units) $960,000
Cost of goods sold 640,000
Gross margin 320,000
Operating expenses 260,000
Operating income $60,000

Kramer is developing its 2016 budget. In 2016, the company wants to increase its sales prices by 12.5% and expects a 9% decrease in sales volume as a result. All other operating expenses are expected to remain constant. Suppose cost of goods sold is a variable cost and operating expenses are a fixed cost.

 Required

What are the budgeted sales for 2016?

What is the budgeted cost of goods sold for 2016?

Should Kramer increase its selling price in 2016?

Answer rating: 100% (QA)

To calculate the budgeted sales for 2016 we need to apply the expected changes in sales prices and s... View the full answer