Russell . Company . has . the . following . projected . account . balances . for . Ju ne . 30 ,. 20X5 : Accounts payable $ 40,000 Sales $ 800,000 Accounts rec eivable $ 100,000 Capital stock $ 400,000 Depreciation , factory $ 24,00 0 Retained earnings ? Inventories ( 5 / 31 & 6 / 30 ) $ 180,000 Cash $ 56,0 00 Direct materials used $ 200,000 Equipment , net $ 240,000 Office sa laries $ 80,000 Buildings , net $ 400,000 Insurance , factory $ 4,000 Utili ties , factory $ 16,000 Plant wages $ 140,000 Selling expenses $ 60,000 Bonds payable $ 160,000 Maintenance , factory $ 28,000 Required a ) Prepare . a . budgeted . income . statement . for . June . 20X5 . b ) Prepare . a . budgeted . balance . sheet . as . of . June . 30 ,. 20X5 . ( Points : 25 ) 2 . ( TCO 5 ) Steven ' s Medical Equipment Company manufactures hosp ital beds . Its most popular model , Deluxe , sells for $ 5,000 . It has varia ble costs totaling $ 2,800 and fixed costs of $ 1,000 per unit , based on a n average production run of 5,000 units . It normally has four producti on runs a year , with $ 600,000 in setup costs each time . Plant capacity can handle up to six runs a year for a total of 30,000 beds . A competit or is introducing a new hospital bed similar to Deluxe that will ……..? ( Points : 25 )
2 . ( TCO 5 ) Robert ' s Medical Equipment Company manufactures hosp ital beds . Its most popular model , Deluxe , sells for $ 5,000 . It has varia ble costs totaling $ 2,800 and fixed costs of $ 1,000 per unit , based on a n average production run of 5,000 units . It normally has four producti on runs a year , with $ 400,000 in setup costs each time . Plant capacity can handle up to six runs a year for a total of 30,000 beds . A competitor is introducing a new hospital bed similar to Deluxe that will sell for $ 4,000 . Management believes it must lower the price to c ompete . Marketing believes that the new price will increase sales by 2 5 % a year . The plant manager thinks that production can increase by 2 5 % with the same level of fixed costs . The company currently sells all the Deluxe beds it can produce . Question 2 : What is the annual operating income from Deluxe if the price is reduced to $ 4,000 and sales in units increase by 25 %? Sales ( 25,000 x $ 4,000 ) $ 100,000,000 3 . ( TCO 7 ) Grace Greeting Cards Incorporated is starting a new busin ess venture and are in the process of evaluating its product lines . Infor