Use the Following Information and the Percent-Of-Sales Method to Answer

question 31

Multiple Choice

Use the following information and the percent-of-sales method to answer the following question(s) .
Below is the 2014 year-end balance sheet for Banner,Inc.Sales for 2014 were $1,600,000 and are expected to be $2,000,000 during 2015.In addition,we know that Banner plans to pay $90,000 in 2015 dividends and expects projected net income of 4% of sales.(For consistency with the Answer selections provided,round your forecast percentages to two decimals. )
Banner,Inc.Balance Sheet
December 31,2014
Assets
Current assets $890,000
Net fixed assets 1,000,000
Total $1,890,000
Liabilities and Owners' Equity
Accounts payable $160,000
Accrued expenses 100,000
Notes payable 700,000
Long-term debt 300,000
Total liabilities 1,260,000
Common stock (plus paid-in capital) 360,000
Retained earnings 270,000
Common equity 630,000
Total 1,890,000
-Banner's projected fixed assets for 2015 are

• A)$1,120,000.
• B)$1,260,000.
• C)$1,000,000.
• D)$2,380,000.

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Definitions:

Manufacturing

The process of producing goods using raw materials, machinery, and labor.

Customer Order

A request made by a customer for a specific product or service from a business.

Mass Customization

Mass customization is a manufacturing and business strategy that combines the flexibility and personalization of custom-made products with the low unit costs associated with mass production.

Tailoring Products

The process of customizing goods or services to meet the specific needs or preferences of individual customers or market segments.