Advanced Enterprises reports yearend information from 2018 a

Advanced Enterprises reports year-end information from 2018 as follows: Sales (160 750 units) $965,000 Cost of goods sold Gross margin Operating expenses Operating income 643000 322,000 267,000 Advanced is developing the 2019 budget. In 2019 the company would like to increase selling prices by 12.5%, and as a result expects a decrease in sales volume of 9%. 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? O A. S700,870 O B. S585,130 C. S723,375 OD. S643,000

Solution

Year 2018 Total % Cost per unit = Total cost/160750 Sales $965,000.00 100.00% $6.00 Less: COGS $643,000.00 66.63% $4.00 New units = 160750 x (1-9%) 146282.5 COGS = 146282.5 x $4 $585,130.00