3. Direct Material Budget		Wood Pieces	Beads	Total
Basic abacus	1 and 2 per unit	35,950	71,900
Deluxe abacus	2 and 3 per unit	73,800	110,700
Desired inventory, December 31, 20Y2		2,200	5,000
Total packages available		111,950	187,600
Estimated inventory, January 1, 20Y2		-3,500	-4,500
Total packages to be purchased		108,450	183,100	291,550
Unit price (per package)		$ 0.30	$ 0.30	$ 0.30
Total direct materials to be purchased		$ 32,535	$ 54,930	$ 87,465
4. Direct Labor Budget		Gluing	Assembly	Total
Hours required for production:
Basic abacus	0.10 Hour	3,595	3,595
Deluxe abacus	0.10 Hour and 0.2	3,690	7,380
Total		7,285	10,975
Hourly rate		$ 11	$ 17
Total direct labor cost		$ 80,135	$ 186,575	$ 266,710
Indirect factory wages	$ 5,400	Depreciation of Plant & Equipment	$1450
Power and light (Plug in)	$ 11,250	Total Factory Overhead Cost	$18,100
Finished goods inventory, January 1, 20Y2			$ 9,870
Work in process inventory, January 1, 20Y2		$ 2,010
Direct materials:
Direct materials inventory, January 1, 20Y2	$ 2,400
Direct materials purchases	$ 87,465
Cost of direct materials available for use	$ 89,865
Direct materials inventory, December 31, 20Y2	$ -2,160
Cost of direct materials placed in production	$ 87,705
Direct labor	$ 266,710
Factory overhead	$ 18,100
Total manufacturing costs		$ 372,515
Total work in process during period		$ 374,525
Work in process inventory, December 31, 20Y2		$ -1,250
Cost of goods manufactured			$ 373,275
Cost of finished goods available for sale			$ 383,145
Finished goods inventory, December 31, 20Y2			$ -1,500
Cost of goods sold			$ 381,645
Sales salaries expense	$ 45,000
Advertising expense	$ 15,000
Travel expense	$ 5,400
Total selling expenses		$ 65,400
Officers' salaries expense	$ 85,000
Office salaries expense	$ 35,000
Office rent expense	$ 26,000
Office supplies expense	$ 6,400
Miscellaneous administrative expenses	$ 1,600
Total administrative expenses		$ 154,000
Total selling and administrative expenses		$ 219,400

Budgeted Income Statement Data Table
Interest revenue for the year	$2,000
Interest expense for the year	$1,500
LearnCos income tax rate	40%

LearnCo's - Budgeted Income Statement - For the Year Ending December 31, 20Y2 ( Fill out each "??")

Revenue from sales: ?? Cost of goods sold: ?? Gross Profit: ?? Selling & Administrative Expenses: ?? Selling Expenses: ?? Administrative Expenses: ?? Total Selling & Administrative Expenses: ?? Income from Operations: ?? Other Revenue & Expense: ?? Interest Revenue: ?? Income Before Income Tax: ?? Income Tax: ?? Net Income: ??

Budgeting affects the planning, directing, and controlling functions of management. LearnCo wishes to determine the sensitivity of some of its budget values to changes in the economy. Using the information on the completed budget panels, answer the following questions. Consider each question separately, assuming that all other data remains the same, including the level of production of each model. (Answer #1-4) (1.) LearnCo believes that sales of the Deluxe Abacus model may decrease in 20Y2. If Deluxe abacus sales are zero, what will be the effect on LearnCos income before income tax? For simplicity, ignore any change in Cost of Goods Sold. Choose one of the following: a. If LearnCo sells zero Deluxe Abacus units in 20Y2, it will break even (i.e., the company will have zero income before income tax). b. LearnCo will have a net loss before income tax if it sells zero Deluxe Abacus units in 20Y2. c. LearnCo will still have positive income before income tax if it sells zero Deluxe Abacus units in 20Y2. (2.) LearnCo's vendor for bead packages is expected to double its price per package of beads. If this occurs, what will be the effect on LearnCos income before income tax? Choose one of the following: a.LearnCo will still have positive income before income tax if the price for bead packages doubles. b. LearnCo will have a loss before income tax if the price for bead packages doubles. c. If the price for bead packages doubles, LearnCo will break even (i.e., the company will have zero income before income tax). (3.) LearnCo is aware that its labor prices for the Gluing part of the manufacturing process may increase to $15.00 per hour due to changes in minimum wage laws in its state. If this occurs, what will be the effect on LearnCos income before income tax? Choose one of the following: a. If Gluing labor costs increase to $15.00 per hour, LearnCo will break even (i.e., the company will have zero income before income tax). b. LearnCo will have a loss before income tax if Gluing labor costs increase to $15.00 per hour. c. LearnCo will still have positive income before income tax if Gluing labor costs increase to $15.00 per hour. (4.) LearnCos controller believes that the company can decrease its selling expenses by 10% and its administrative expenses by 15%. How much would income before income tax increase if these expense cuts are implemented? Round your answer to the nearest dollar.