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Rassmussen Vineyards Rassmussen Vineyards grows a unique white pinot noir grape that it uses to produce a white wine that is in high demand. Rassmussen
Rassmussen Vineyards Rassmussen Vineyards grows a unique white pinot noir grape that it uses to produce a white wine that is in high demand. Rassmussen uses all the grapes it can grow to produce its own white pinot noir wine. Rassmussen pinot noir wine contains 100 percent Rassmussen-grown grapes. The company neither buys nor sells grapes. Because of the uniqueness and difficulty of growing white pinot grapes, Rassmussen can only produce 8,000 cases ( 12 bottles per case) in a normal year. A good growing season might yield 10,000 cases, whereas bad weather can cut production to 5,000 cases. In a normal year, Rassmussen expects to sell its wine to wholesalers for $120 per case. The following table summarizes how Rassmussen managers expect their costs to vary with the number of cases produced. Required: a. Prepare a flexible budget (including budgeted net income before tax), assuming Rassmussen produces and sells 8,000 cases of wine. b. Calculate the break-even number of cases. c. How many cases does Rassmussen have to produce if it wants an after-tax profit of $300,000 and the income tax rate is 25 percent? d. Bad weather this year cut Rassmussen's production and sales to only 6,000 cases. The low yield drove up wholesale prices of the white pinot wine from $120 to $140 per case. Rassmussen's actual expenses for the year were: Design and prepare a table that reports the performance of Rassmussen for the year. e. Write a short memo summarizing Rassmussen's performance before tax during the past year. Did management do a good or bad job? Rassmussen Vineyards Rassmussen Vineyards grows a unique white pinot noir grape that it uses to produce a white wine that is in high demand. Rassmussen uses all the grapes it can grow to produce its own white pinot noir wine. Rassmussen pinot noir wine contains 100 percent Rassmussen-grown grapes. The company neither buys nor sells grapes. Because of the uniqueness and difficulty of growing white pinot grapes, Rassmussen can only produce 8,000 cases ( 12 bottles per case) in a normal year. A good growing season might yield 10,000 cases, whereas bad weather can cut production to 5,000 cases. In a normal year, Rassmussen expects to sell its wine to wholesalers for $120 per case. The following table summarizes how Rassmussen managers expect their costs to vary with the number of cases produced. Required: a. Prepare a flexible budget (including budgeted net income before tax), assuming Rassmussen produces and sells 8,000 cases of wine. b. Calculate the break-even number of cases. c. How many cases does Rassmussen have to produce if it wants an after-tax profit of $300,000 and the income tax rate is 25 percent? d. Bad weather this year cut Rassmussen's production and sales to only 6,000 cases. The low yield drove up wholesale prices of the white pinot wine from $120 to $140 per case. Rassmussen's actual expenses for the year were: Design and prepare a table that reports the performance of Rassmussen for the year. e. Write a short memo summarizing Rassmussen's performance before tax during the past year. Did management do a good or bad job
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