Consider the information given in problem 6-37 on pages 235 and 236 of the text (the MLM #8 problem). The questions below refer to modifications of that problem. The following four modifications are applicable to all questions: (i) the projected sales of Thingone and Thingtwo are to be increased by the last four digits of your student identification number (i.e., add the last four digits of your student identification number to unit sales)(ii) the variable overhead rate is set at $8 per direct labor hour, (iii) the fixed manufacturing overhead is budgeted at $8,336,000 and the fixed manufacturing overhead rate is not fixed, but is set equal to the quotient of budgeted fixed overhead divided by budgeted direct labor hours, and (iv) the units in beginning and ending finished goods inventories are assumed to be valued at the current unit production costs.

1. Suppose that the target ending inventory of Thingone is modified from 29,000 to 27,000 units, and the target ending inventory of Thingtwo is modified from 8,000 to 7,000 units. What would be Chens budgeted gross profit (or loss) for 2020?

6-37 Revenue and production budgets. (CPA, adapted) The Chen Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2016, Chen's budget department gathered the following data to prepare budgets for 2017: 2017 Projected Sales Product Units Price Thingone 69,000 $160 Thingtwo 44,000 $258 2017 Inventories in Units Expected Target Product January 1, 2017 December 31, 2017 Thingone 24,000 29,000 Thingtwo 7,000 8,000 The following direct materials are used in the two products: Direct Material A B Unit pound pound each Amount Used per Unit Thingone Thingtwo 6 7 4 5 0 3 Projected data for 2017 for direct materials are: Expected Inventories Target Inventories Direct Material Anticipated Purchase Price January 1, 2017 December 31, 2017 A $13 36,000 lb. 38,000 lb. B 8 31,000 lb. 34,000 lb. C 7 9,000 units 12,000 units Projected direct manufacturing labor requirements and rates for 2017 are: Product Hours per Unit Rate per Hour Thingone $13 Thingtwo 5 18 Manufacturing overhead is allocated at the rate of $24 per direct manufacturing labor-hour. Based on the preceding projections and budget requirements for Thingone and Thingtwo, prepare the fol- lowing budgets for 2017: 1. Revenues budget fin dollars) 2. What questions might the CEO ask the marketing manager when reviewing the revenues budget? Explain briefly. 3. Production budget (in units) 4. Direct material purchases budget in quantities) 5. Direct material purchases budget (in dollars) 6. Direct manufacturing labor budget (in dollars) 7. Budgeted finished-goods inventory at December 31, 2017 in dollars) 8. What questions might the CEO ask the production manager when reviewing the production, direct materials, and direct manufacturing labor budgets? 9. How does preparing a budget help Chen Corporation's top management better manage the company