Number Cruncher Corporation (NCC) manufactures and sells ultrathin tablet computers. Janet Short, who is a budget analyst, coordinated the preparation of the annual budget for this year. The budget was based on the prior year's sales and production activity. The budgeted income statement and schedule cost of goods manufactured and sold are as follows:

Number Cruncher Corporation Budgeted

Income Statement for the year ending 31 December

___________________________________________________ ($'000s) ______ ($'000s)

Sales revenue .................................................................................. $25 550

Cost of goods sold ............................................................................. 19 895

Gross margin ..................................................................................... 5 655

Operating expenses:

Marketing ............................................................ 3 200 ...........................

General and administrative ........................................ 2 000 .................. 5 200

Profit from operations before taxes .......................................................... $ 455

Budgeted Schedule of Cost of Goods Manufactured and sold for the year ending 31 December

* No work in process inventory is anticipated at the beginning or end of the year.
On 18 April, Short met with Peter Marker, the finance director, to discuss the first quarter's results. After their discussion, Marker directed Short to incorporate the following changes to the budget assumptions in revised budgeted statements:

■ The estimated production in units for the year should be revised from 140 000 to 160 000 units, with the balance of production being scheduled in equal segments over the last nine months of the year. The actual first quarter's production was 25 000 units. There will be no work in process inventories.

■ The planned finished goods inventory of 3300 units at the end of the year remains unchanged and will be valued at the average manufacturing cost for the year. The finished goods inventory of ;moo units on 1 January had dropped to 9000 units by 31 March.

■ Due to a new labour agreement. the labour rate will increase by 8 per cent, effective 1 October, the beginning of the fourth quarter, instead of the previously anticipated effective date of 1 January of the following year.

■ The assumptions remain unchanged for raw material inventory: 16 000 units for the beginning inventory and 18 500 units for the ending inventory. Paw material inventory is valued on a first-in, first-out (FIFO) basis. During the first quarter, raw material for 27 500 units of output was purchased for $2 200 000. Although raw material will be purchased evenly for the last nine months, the cost of the raw material will increase by 5 per cent on 1 July.

■ Indirect material costs will continue to be projected at 10 per cent of the cost of direct material used.

■ Half of the other manufacturing overhead, and all the marketing and general and administrative expenses, are fixed. The remainder of the manufacturing overhead varies in proportion to the volume of production.

Required:
1. Based on the revised data, calculate NCC's projected sales for this year in:
(a) Units.
(b) Dollars.
2. Prepare the revised budgeted schedule of cost of goods sold. (Carry your calculation of the average cost per unit to the nearest cent. Round the finished goods inventory to the nearest dollars.)

Transcribed Image Text:

(S'000s) (S'000s) Direct material: Raw material inventory, 1 January $1 200 Raw material purchased 11 400 $12 600 Raw material available for use 1 480 Raw material inventory, 31 December Direct material used 11 120 Direct labor 4 200 Manufacturing overhead: 1112 Indirect material Other overhead 2 800 3912 Finished goods inventory, 1 January 1116 $20 348 Cost of goods available for sale Finished goods inventory, 31 December 453 Cost of goods sold $19 895