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# Manufacturing Sales Budgets: Martin & Sons

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Martin & Sons, a small door manufacturer, sold 4,600 white six-panel doors for \$130 each and 2,400 unfinished six-panel doors for \$100 each. Mr. Martin feels that because home-owners are doing more themselves and the economy is down, that they may see an increase of 15% in sales of unfinished six-panel doors in 2012 and a corresponding 10% increase in sales of white six-panel doors. He wonders if he lowered the price of the white six-panel doors to \$120 each, that he may only see an 8% decline in sales of white six-panel doors and the corresponding increase in unfinished six-panel doors.

1. Prepare a 2012 sales budget assuming that Martin & Sons holds prices at the current level and sales quantity remains at the 2011 level.

2. Prepare a 2012 sales budget assuming that Martin & Sons holds prices at the current level and the decrease in white six-panel doors is realized as is the increase in unfinished six-panel doors.

3. Prepare a 2012 sales budget assuming that Martin & Sons lowers the price of six-panel doors to \$120 each and the decline in sales is as anticipated.

4. Should Martin & Sons lower the price of the white six-panel doors to \$120 each?

5. Suppose the cost to produce the white six-panel door is \$80 and the unfinished six-panel door is \$45, at what volume level of each of the doors does the company make the most amount of profit? Show your work!

6. Theorize the following:

a. What changes could the company make if they wanted to maintain a cash balance of \$650,000, rather than \$350,000?
b. What is the company's cost of borrowing was 6%, rather than 12%? What recommendations would you make to them?
c. What is the company experienced 10% of bad debt per year? What would be the impact on their ending cash?

#### Solution Preview

Your sales budgets are completed in Excel (** see attached **) along with commentary about whether sales price reductions help the sales forecast and profit forecast.

6. Theorize the following:

a. What changes could the company make if they wanted to maintain a cash balance of \$650,000, rather than \$350,000?

We don't know much ...

#### Solution Summary

Your tutorial computes sales budgets in Excel (**>> see attached <<**) along with commentary about whether sales price reductions help the sales forecast and profit forecast. Click in cells to see computations and formulas.

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