CMA Study Group

hi everyone
 can any person help me to solve this question:

Netco's sales budget for the coming year is as follows.

Item             Volume in Units          Sales Price                Sales Revenue
 1                     200,000                    $50                          $10,000,000
 2                     150,000                     10                            1,500,000
 3                     300,000                      30                           9,000,000
                                   Total sales revenue                        $20,500,000

Items 1 and 3 are different models of the same product. Item 2 is a complement to Item
1. Past experience indicates that the sales volume of Item 2 relative to the sales volume
of Item 1 is fairly constant. Netco is considering an 10% price increase for the coming
year for Item 1, which will cause sales of Item 1 to decline by 20%, while simultaneously
causing sales of Item 3 to increase by 5%. If Netco institutes the price increase for Item
1, total sales revenue will decrease by

a. $1,050,000.
b. $850,000.
c. $750,000.
d. $550,000.


thankes




-------------------------------------------
Ayda Fahim Samaan
Accountant
Mina Tex
Sidi Beasher
Egypt
-------------------------------------------

Item 1 Current Price	50
Increase at 10%	5
New Price	55
Current sales Qty	200000
Expected loss at 20%	40000
Estimated sales qty at new price	160000
Total Sales Value of Item#1	8,800,000.00
Item 3 Current Sales Volume	300000
Expected Increase by 5%	15000
Expected sales Volume of Item-3	315000
Sales Price	30
Total Sales Value of Item#3	9,450,000.00
Expected Sales of Item-2	1,500,000.00
Total Sales	19,750,000.00
Current Sales Revenue	20,500,000.00
Sales Revenue decrease	750,000.00

-------------------------------------------
Jacob Chandapillai
Accountant
Dubai Customs HQ
Dubai
United Arab Emirates
-------------------------------------------






Original Message:
Sent: 10-21-2012 03:17 AM
From: Ayda Fahim Samaan
Subject: part 1 Question

hi everyone
 can any person help me to solve this question:

Netco's sales budget for the coming year is as follows.

Item             Volume in Units          Sales Price                Sales Revenue
 1                     200,000                    $50                          $10,000,000
 2                     150,000                     10                            1,500,000
 3                     300,000                      30                           9,000,000
                                   Total sales revenue                        $20,500,000

Items 1 and 3 are different models of the same product. Item 2 is a complement to Item
1. Past experience indicates that the sales volume of Item 2 relative to the sales volume
of Item 1 is fairly constant. Netco is considering an 10% price increase for the coming
year for Item 1, which will cause sales of Item 1 to decline by 20%, while simultaneously
causing sales of Item 3 to increase by 5%. If Netco institutes the price increase for Item
1, total sales revenue will decrease by

a. $1,050,000.
b. $850,000.
c. $750,000.
d. $550,000.


thankes




-------------------------------------------
Ayda Fahim Samaan
Accountant
Mina Tex
Sidi Beasher
Egypt
-------------------------------------------

Thankes Jacob for your reply but i will tell you the correct answer I knew yesterday,

a. $1,050,000.

  Item 2 is a complement to Item 1   , Item2  75 % from Item 1  150000/20000
  after decline  item 1 by 20%, become  160000
                       item 2 =160000*75 %     120000
                            


sales revenue item 2   120000*10=1200000
sales revenue item 1    160000*55=8800000
sales revenue item 3     315000*30=9450000
                                                          19450000

total sales revenue                        $20,500,000

sales revenue will decrease by 1050000


-------------------------------- -----------
Ayda Fahim Samaan
Accountant
Mina Tex
Sidi Beasher
Egypt
-------------------------------------------






Original Message:
Sent: 10-21-2012 12:24 PM
From: Jacob Chandapillai
Subject: part 1 Question

Item 1 Current Price	50
Increase at 10%	5
New Price	55
Current sales Qty	200000
Expected loss at 20%	40000
Estimated sales qty at new price	160000
Total Sales Value of Item#1	8,800,000.00
Item 3 Current Sales Volume	300000
Expected Increase by 5%	15000
Expected sales Volume of Item-3	315000
Sales Price	30
Total Sales Value of Item#3	9,450,000.00
Expected Sales of Item-2	1,500,000.00
Total Sales	19,750,000.00
Current Sales Revenue	20,500,000.00
Sales Revenue decrease	750,000.00

-------------------------------------------
Jacob Chandapillai
Accountant
Dubai Customs HQ
Dubai
United Arab Emirates
-------------------------------------------






Original Message:
Sent: 10-21-2012 03:17 AM
From: Ayda Fahim Samaan
Subject: part 1 Question

hi everyone
 can any person help me to solve this question:

Netco's sales budget for the coming year is as follows.

Item             Volume in Units          Sales Price                Sales Revenue
 1                     200,000                    $50                          $10,000,000
 2                     150,000                     10                            1,500,000
 3                     300,000                      30                           9,000,000
                                   Total sales revenue                        $20,500,000

Items 1 and 3 are different models of the same product. Item 2 is a complement to Item
1. Past experience indicates that the sales volume of Item 2 relative to the sales volume
of Item 1 is fairly constant. Netco is considering an 10% price increase for the coming
year for Item 1, which will cause sales of Item 1 to decline by 20%, while simultaneously
causing sales of Item 3 to increase by 5%. If Netco institutes the price increase for Item
1, total sales revenue will decrease by

a. $1,050,000.
b. $850,000.
c. $750,000.
d. $550,000.


thankes




-------------------------------------------
Ayda Fahim Samaan
Accountant
Mina Tex
Sidi Beasher
Egypt
-------------------------------------------

Answer is "A"

Price before Price Increase	Price after Price increase	Volume before Sales reduction	Volume after Sales increase	Existing Revenue	Revenue after price increase	Difference
50	55	200,000	160,000	10,000,000	8,800,000	1,200,000
10	10	150,000	120,000	1,500,000	1,200,000	300,000
30	30	300,000	315,000	9,000,000	9,450,000	(450,000)
				Net reduction in Rev		1,050,000

-------------------------------------------
Gopala Krishnan Sethuraman
Accountant
Al Futtaim Engineering
DUBAI
United Arab Emirates
-------------------------------------------






Original Message:
Sent: 10-21-2012 03:17 AM
From: Ayda Fahim Samaan
Subject: part 1 Question

hi everyone
 can any person help me to solve this question:

Netco's sales budget for the coming year is as follows.

Item             Volume in Units          Sales Price                Sales Revenue
 1                     200,000                    $50                          $10,000,000
 2                     150,000                     10                            1,500,000
 3                     300,000                      30                           9,000,000
                                   Total sales revenue                        $20,500,000

Items 1 and 3 are different models of the same product. Item 2 is a complement to Item
1. Past experience indicates that the sales volume of Item 2 relative to the sales volume
of Item 1 is fairly constant. Netco is considering an 10% price increase for the coming
year for Item 1, which will cause sales of Item 1 to decline by 20%, while simultaneously
causing sales of Item 3 to increase by 5%. If Netco institutes the price increase for Item
1, total sales revenue will decrease by

a. $1,050,000.
b. $850,000.
c. $750,000.
d. $550,000.


thankes




-------------------------------------------
Ayda Fahim Samaan
Accountant
Mina Tex
Sidi Beasher
Egypt
-------------------------------------------

Netco's sales budget for the coming year is as follows.

Item             Volume in Units          Sales Price                Sales Revenue
 1                     200,000                    $50                          $10,000,000
 2                     150,000                     10                            1,500,000
 3                     300,000                      30                           9,000,000
                                   Total sales revenue                        $20,500,000

Items 1 and 3 are different models of the same product. Item 2 is a complement to Item
1. Past experience indicates that the sales volume of Item 2 relative to the sales volume
of Item 1 is fairly constant. Netco is considering an 10% price increase for the coming
year for Item 1, which will cause sales of Item 1 to decline by 20%, while simultaneously
causing sales of Item 3 to increase by 5%. If Netco institutes the price increase for Item
1, total sales revenue will decrease by

a. $1,050,000.
b. $850,000.
c. $750,000.
d. $550,000.

-------------------------------------------

-------------------------------------------
Safaa Khalil
Unemployed
Kuwait
Kuwait
-------------------------------------------






Original Message:
Sent: 10-21-2012 03:17 AM
From: Ayda Fahim Samaan
Subject: part 1 Question

hi everyone
 can any person help me to solve this question:

Netco's sales budget for the coming year is as follows.

Item             Volume in Units          Sales Price                Sales Revenue
 1                     200,000                    $50                          $10,000,000
 2                     150,000                     10                            1,500,000
 3                     300,000                      30                           9,000,000
                                   Total sales revenue                        $20,500,000

Items 1 and 3 are different models of the same product. Item 2 is a complement to Item
1. Past experience indicates that the sales volume of Item 2 relative to the sales volume
of Item 1 is fairly constant. Netco is considering an 10% price increase for the coming
year for Item 1, which will cause sales of Item 1 to decline by 20%, while simultaneously
causing sales of Item 3 to increase by 5%. If Netco institutes the price increase for Item
1, total sales revenue will decrease by

a. $1,050,000.
b. $850,000.
c. $750,000.
d. $550,000.


thankes




-------------------------------------------
Ayda Fahim Samaan
Accountant
Mina Tex
Sidi Beasher
Egypt
-------------------------------------------

Hi All, just to come to conclusion will anyone help to debate on the below line in the question :

"Past experience indicates that the sales volume of Item 2 relative to the sales volume
of Item 1 is fairly constant. "

Does this sentence mean that sales is constant/independent of the sales fluctuation of sales @No1, I am of the opinion the sale of Point 2 is not varying with fluctuation of sales and hence the answer per my opinion should be $750000?

Please help to understand.

-------------------------------------------
Hemendra






Original Message:
Sent: 10-23-2012 02:59 AM
From: Safaa Khalil
Subject: part 1 Question

Netco's sales budget for the coming year is as follows.

Item             Volume in Units          Sales Price                Sales Revenue
 1                     200,000                    $50                          $10,000,000
 2                     150,000                     10                            1,500,000
 3                     300,000                      30                           9,000,000
                                   Total sales revenue                        $20,500,000

Items 1 and 3 are different models of the same product. Item 2 is a complement to Item
1. Past experience indicates that the sales volume of Item 2 relative to the sales volume
of Item 1 is fairly constant. Netco is considering an 10% price increase for the coming
year for Item 1, which will cause sales of Item 1 to decline by 20%, while simultaneously
causing sales of Item 3 to increase by 5%. If Netco institutes the price increase for Item
1, total sales revenue will decrease by

a. $1,050,000.
b. $850,000.
c. $750,000.
d. $550,000.

Item 1 Current Price	50
Increase at 10%	5
New Price	55
Current sales Qty	200000
Expected  decline by 20%	40000
Estimated sales qty at new price	160000
Total Sales Value of Item#1	8,800,000
Item 2 relative to the sales volume      of Item 1 is fairly constant, so Total sales of item #2  will decline by 20% (80%*150000)*10=                           1,200,000
Item 3 Current Sales Volume	300,000
Expected Increase by 5%	15,000
Expected sales Volume of Item-3	315,000
Sales Price	30
Total Sales Value of Item#3	9,450,000
Expected Sales of Item-2	1,200,000
Total Sales*	(19,450,000)
*(Sales of items #1+#2+#3)
Current Sales Revenue	20,500,000
Sales Revenue decrease	1,050,000

-------------------------------------------

-------------------------------------------
Safaa Khalil
Unemployed
Kuwait
Kuwait
-------------------------------------------






Original Message:
Sent: 10-21-2012 03:17 AM
From: Ayda Fahim Samaan
Subject: part 1 Question

hi everyone
 can any person help me to solve this question:

Netco's sales budget for the coming year is as follows.

Item             Volume in Units          Sales Price                Sales Revenue
 1                     200,000                    $50                          $10,000,000
 2                     150,000                     10                            1,500,000
 3                     300,000                      30                           9,000,000
                                   Total sales revenue                        $20,500,000

Items 1 and 3 are different models of the same product. Item 2 is a complement to Item
1. Past experience indicates that the sales volume of Item 2 relative to the sales volume
of Item 1 is fairly constant. Netco is considering an 10% price increase for the coming
year for Item 1, which will cause sales of Item 1 to decline by 20%, while simultaneously
causing sales of Item 3 to increase by 5%. If Netco institutes the price increase for Item
1, total sales revenue will decrease by

a. $1,050,000.
b. $850,000.
c. $750,000.
d. $550,000.


thankes




-------------------------------------------
Ayda Fahim Samaan
Accountant
Mina Tex
Sidi Beasher
Egypt
-------------------------------------------