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In 2017, Peterson & Sons, a small environmental-testing firm, performed 11,200 radon tests for $300 each and 15,200 lead tests for $210 each. Because newer
In 2017, Peterson & Sons, a small environmental-testing firm, performed 11,200 radon tests for $300 each and 15,200 lead tests for $210 each. Because newer homes are being built with lead-free pipes, lead-testing volume is expected to decrease by 13% next year. However, awareness of radon-related health hazards is expected to result in a 4% increase in radon-test volume each year in the near future. Jim Peterson feels that if he lowers his price for lead testing to $190 per test, he will have to face only a 5% decline in lead-test sales in 2018. Read the requirements. For the Year Ended December 31, 2018 Selling price Units sold in 2018 X Total revenues Requirements Radon tests 300 11,648 $ 3,494,400 2,777,040 Lead tests 210 13,224 $ Total 6,271,440 1. Prepare a 2018 sales budget for Peterson & Sons assuming that Peterson holds prices at 2017 levels. 2. Prepare a 2018 sales budget for Peterson & Sons assuming that Peterson lowers the price of a lead test to $190. Should Peterson lower the price of a lead test in 2018 if the company's goal is to maximize sales revenue? Requirement 2. Prepare the sales budget assuming that Peterson lowers the price of a lead test to $190. Sales Budget For the Year Ended December 31, 2018 Total revenues Radon tests Print Done Lead tests Total
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