A D E F I See The Light Projected Income Statement For the Period Ending December 31, 20x1 $ 1.125,000.00 750,000.00 $ 375,000.00 Sales 25,000 lamps @ $45.00 Cost of Goods Sold @ $30.00 Gross Profit Selling Expenses: Fixed Variable (Commission per unit) @ $3.00 Administrative Expenses: Fixed Variable @ $2.00 Total Selling and Administrative Expenses: Net Profit $ 23,000.00 75,000.00 $ 98,000.00 $ 42,000.00 50,000.00 92,000.00 190,000.00 185,000.00 $ I See The Light Projected Balance Sheet As of December 31, 20x1 Current Assets Cash Accounts Receivable $ 34.710.00 67.500.00 8 D E F G H I See The Light Projected Balance Sheet As of December 31, 20x1 34,710.00 67,500.00 Current Assets Cash Accounts Receivable Inventory Raw Material Lamp Kits Work in Process Finished Goods Total Current Assets 8,000.00 500 @ $16.00 0 3000 @ $30.00 90,000.00 200,210.00 Fixed Assets Equipment Accumulated Depreciation Total Fixed Assets Total Assets 20,000.00 6,800.00 13,200.00 213,410.00 $ $ 54.000.00 54,000.00 Current Liabilities Accounts Payable Total Liabilities Stockholder's Equity Common Stock Retained Earnings Total Stockholder's Equity Total Liabilities and Stockholder's Equity $ 12,000.00 147.410.00 159.410.00 213,410.00 $ I See The Light, Inc Schedule of Projected Costs 5 Variable Manufacturing Unit Cost 20x1 Cost Projected Percent Increase 20x2 Cost Rounded to 2 Decimal Places 5 Lamp Kit 3 Labor 5 Variable Overhead 2 5.5 6 $16.96 $2.11 $2.12 {4.01) (4.02) (4.03) 2 Projected Variable Manufacturing Cost Per Unit $21.19 {4.04) 3 7 Total Variable Cost Per Unit 20x1 Cost Projected Percent Increase 6.5 20x2 Cost Rounded to 2 Decimal Places 3 Variable Selling Variable Administrative Projected Variable Manufacturing Unit Cost 2 5 3.20 2.10 21.19 {4.05) (4.06) {4.04) 26.49 {4.07) Projected Total Variable Cost Per Unit 1 B 0 Schedule of Fixed Costs A B E Schedule of Fixed Costs 20x1 Cost 20x2 Cost Projected Percent Increase 250000 14 $ 285,000.00 {4.08) lamps @_) Fixed Overhead (normal capacity of Fixed Selling Fixed Administrative $ 29,000.00 46,000.00 {4.09) (4.10) Projected Total Fixed Costs $ 360,000.00 {4.11) PART 2 Cost Volume Relationships - Profit Planning Big Al is about to begin work on the budget for 20x2 and they have requested that you prepare an analysis based on the following assumptions. Note: Remember, that we cannot sell part of a lamp, therefore to find the number of units you have to round up to the next complete unit. Furthuremore, to find the required sales in dollars it may be easier to find the number of units and then multiply by the selling price per unit. 1 For 20x2 the selling price per lamp will be $45.00. What is the projected contribution margin and contribution margin ratio for each lamp sold? Contribution Margin per unit (Round to two places, $##.##) $18.51 (5.01) Contribution Margin Ratio (Round to four places. % is two of those places ##.##%) 41.13% (5.02) 2. For 20x2 the selling price per lamp will be $45.00. The desired net income in 20x2 is $197.500. What would sales in units have to be in 20x2 to reach the profit goal? Breakeven sales in units (Since we cannot sell part of a unit round up to the mixt unit if needed) (5.03) Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit I needed) (5:03) 3. For 20x2 the selling price per lamp will be $45.00. If the fixed cost increase by $70,000.00 how many lamps must be sold to breakeven? Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) {5.04) . 5 Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) (6.03) 7. If for 20x2 the selling price per lamp is decreased to $38.00 a unit how many lamps must be sold to breakeven? Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) (6.04) e 6 Division N has decided to develop its budget based upon projected sales of 27.000 torps et $55.00 per lamp. The company has requested that you prepare a master budget for the year. This budget is to be used for planning and control of operations and should be composed of: 1. Production Budget 2. Materials Budget 3. Direct Labor Budget 4. Factory Overhead Budget 5. Seling and Administrative Budget 6. Cost of Goods Sold Budget 7. Budgeted Income Statement 8. Cash Budget Notes for Budgeting The company wants to maintain the same number of units in the beginning and ending inventories of work-in-process, and electrical parts while increasing the inventory of Lamp Kits to 600 pieces and decreasing the finished goods by 20%. Complete the following budgets 1 Production Budget Planned Sales Desired Ending Inventory of Finished Goods Total Needed Less: Beginning Inventory 27000 2400 29400 3000 26.400 units {7.01) Total Production . B E 2 Materials Budget Lamp Kits Needed for Production Desired Ending Inventory Total Needed Less: Beginning Inventory Total Purchases Cost per plece Cost of Purchases (Round to two places, S##.##) 26.400 units 600 units 27,000 units 500 units (8.01) {8.02) {8.03) (8.04) S $ 16.96 449.440.00 (8.05) {8.06) 3 Direct Labor Budget $ {8.07) Labor Cost Per Lamp Production Total Labor Cost (Round to two places, $####) 2.11 26,400 units 55,704.00 $ (8.08) 4 Factory Overhead Budget $ Variable Factory Overhead: Variable Factory Overhead Cost Per Unit Number of Units to be produced Total Variable Factory Overhead (Round to two places, S##.#) Fixed Factory Overhead 2.1200000 26.400 units 55,968.00 285,000.00 $ $ (8.09) (8.10) Total Factory Overhead (Round to two places, $##.##) $ 340,968.00 {8.11) 4 Factory Overhead Budget Overhead Allocation rate based on: 1. Number of Units Total Factory Overhead / Number of Units (Round to two places, S.) $12.92 19.01) 5 Cost of making one unit next year Cost of one Lamp KR Labor Cost Per Lamp Factory overhead per unit $2.11 19.02) 31.99 19.03) Total cost of one unit (Round to two places, S.#) 6 Selling and Admin. Budget Fixed Selling Variable Seling (Round to two places, S## ##) Fixed Administrative Variable Administrative (Round to two places, $##.##) Total Seling and Administrative (Round to two places, Sw.M8) (9.04) 29000 $86,400.00 46000 56,700.00 218,100.00 $ $ 19.05) 19.06) Round dollars to two places, S. (9.07) Goods - Sold Budget- Beginning Inventory. Finished Goods Production Costs: Materials: Lamp Kits: Beginning inventory Purchased Available for Use Ending Inventory of Lamp Kits Lamp Kits Used In Production S 10.176.00 {9.08) $ $ $ 447,264.00 55.704,00 340,968.00 Total Materials: Labor Overhead Cost of Goods Available Less: Ending Inventory, Finished Goods Cost of Goods Sold (9.09) (9.10) 19.11) (9.12) (9.13) 19.14) $ 76 776.00 7 Budgeted Income Statement Sales Cost of Goods Sold Gross Profit Seling Expenses & Admin. Expenses Net Income (10.01) 8 Cash Budget Assume actual cash receipts and disbursements will follow the pattern below: (Note: Receivables and Payables of 12/31/x1 will have a cash impact in 20x2.) 1. 20.00% of sales for the year are made in November and December. Since our customers have 60 day terms those funds will be collected be collected in January and February 2. 88.00% of material purchases will be paid during the year, the remaining portion will be paid in Januay or February 3. All other manufacturing and operating costs are paid for when incurred. 4. The budgeted depreciation expense is equal to 0.6% of the fixed manufacturing, selling and administrative expenses. 5. Minimum Cash Balance needed for 20x2, $190,000 1 See The Light Projected Cash Budget For the Year Ending December 31, 20x2 Round dollars to two places. S. Beginning Cash Balance Cash Inflows: Sales Collections: Account Receivable (Sales last year not collected) Sales made and collected in 20x2 Cash Available (10.02) (10.03) {10.04) 8 7 Cash Cutlaws 1. 20.00% of sales for the year are made in November and December. Since our customers have 60 day terms those funds will be collected be collected in January and February 2. 88.00% of material purchases will be paid during the year, the remaining portion will be paid in Januay or February All other manufacturing and operating costs are paid for when incurred. The budgeted depreciation expense is equal to 0.6% of the fixed manufacturing, selling and administrative expenses. Minimum Cash Balance needed for 20x2, $190,000 I See The Light Projected Cash Budget For the Year Ending December 31, 20x2 Round dollars to two places, SA Beginning Cash Balance Cash Inflows: Sales Collections: Account Receivable (Sales last year not collected) Sales made and collected in 20x2 Cash Available (10.02) (10.03) (10.04) (10.05) Cash Outflows: Purchases Accounts Payable (Purchases last year) Purchases made and paid for in 20x2 Other Manufacturing Costs Direct Labor Total Manufacturing Overhead Selling and Administrative Less: Depreciation Total Cash Outflows (10.06) {10.07) (10.08) Budgeted Cash Balance before financing Needed Minimum Balance (10.09) Amount to be borrowed (if any) (10.10) Budgeted Cash Balance