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Patrick and Bob started My My Baby two years ago to produce baby furniture, such as cribs, closets, changing tables etc. Bob, as the CFO, would like to start creating a budget for My MyBaby for performance management purposes and cash flow assessments. This is the first time that My My Baby is going through a budget process, hence, Bob engaged you as their accountant to build the budget package for the year 2020 After your interview with Bob, you have collected the following information: Sales has been steadily increasing over the last two years. My My Baby has two key product lines: My Little Sunshine, the simple and classic line of baby cribs, and My Boss Baby, a high-end and premium line of baby cribs Historical sales units for the last two years are list below. Bob expects 2020's sale to continue to increase steadily at the same rate. 2018 2019 My Little Sunshine 10,000 12,000 My Boss Baby 4,000 5,000 My My Baby has a gross margin of 25% on gross sales for both lines. The selling price per unit for My Little Sunshine and My Boss Baby are $250 and 5450 respectively 20% of sales are for cash. The remaining sales are credit sales. Collections are expected to be soll within the year and 2 is uncollectible. NO AR is expected to be outstanding at the end of 2019. . Bob would like to always keep inventory equals to 20% of prior period sales on hand for each product line. The ending inventory of 2019 is expected to be 1,400 units for My Little Sunshine and counts for My Boos Baby Other expenses budgeted by My My Baby are listed below Production Supervisor 100,000 Depreciation - Office 350,000 Rent - Warehouse 500,000 Rent - Factory 700,000 Marketing 100,000 Factory Insurance 98,000 Patrick and Bob's Salaries 250,000 A labour hours 78,000 Factory Utilities 100,000 Activate Windows Manufacturing supplies SOCO All purchases and expenses are initially paid by credit. 90% of the annual expenses are expected to paid within the year. The tax rate for My My Baby is 27% Required: answer all of the parts in the next worksheet. "Student Answer 1) Prepare Budgeted Operating Income Statement in good form with the following supporting schedules A. Sales budget B. Production budget C. Factory overhead budget D. Selling & Administrative Expense Budget 2) Patrick would like to develop a new line of changing tables of My My Baby. The expected up front investment is $2 million. Should My My Baby invest based on the current financial situation? (hint cash flow What is the risk of relying on this budget? What do you suggest for My My Baby to do to mitigate this? Reminders: a) Prepare required budgets and supporting schedules in Requirementui tab. Feel free to add additional tab as required. For the additional tabs, please clearly indicate the relevant requirement being addressed. (ExIf you add one tab for Requirements, the tab should be named Requirement. 1 and should be placed right after Requirement.) b) Required 2 should be done on a separate tab. Activate Window c) Clearly label all your schedules and numbers with proper headings, labels, dates and units. Please show your work 1) Prepare Budgeted Operating Income Statement in good form with the following supporting schedules A. Sales budget B. Production budget C. Factory overhead budget D. Selling & Administrative Expense Budget 3 2) Patrick would like to develop a new line of changing tables of My My Baby. The expected up front investment is $2 million. Should My My Baby invest based on the current financial situation? (hint: cash flow What is the risk of relying on this budget? What do you suggest for My My Baby to do to mitigate this? Patrick and Bob started My My Baby two years ago to produce baby furniture, such as cribs, closets, changing tables etc. Bob, as the CFO, would like to start creating a budget for My MyBaby for performance management purposes and cash flow assessments. This is the first time that My My Baby is going through a budget process, hence, Bob engaged you as their accountant to build the budget package for the year 2020 After your interview with Bob, you have collected the following information: Sales has been steadily increasing over the last two years. My My Baby has two key product lines: My Little Sunshine, the simple and classic line of baby cribs, and My Boss Baby, a high-end and premium line of baby cribs Historical sales units for the last two years are list below. Bob expects 2020's sale to continue to increase steadily at the same rate. 2018 2019 My Little Sunshine 10,000 12,000 My Boss Baby 4,000 5,000 My My Baby has a gross margin of 25% on gross sales for both lines. The selling price per unit for My Little Sunshine and My Boss Baby are $250 and 5450 respectively 20% of sales are for cash. The remaining sales are credit sales. Collections are expected to be soll within the year and 2 is uncollectible. NO AR is expected to be outstanding at the end of 2019. . Bob would like to always keep inventory equals to 20% of prior period sales on hand for each product line. The ending inventory of 2019 is expected to be 1,400 units for My Little Sunshine and counts for My Boos Baby Other expenses budgeted by My My Baby are listed below Production Supervisor 100,000 Depreciation - Office 350,000 Rent - Warehouse 500,000 Rent - Factory 700,000 Marketing 100,000 Factory Insurance 98,000 Patrick and Bob's Salaries 250,000 A labour hours 78,000 Factory Utilities 100,000 Activate Windows Manufacturing supplies SOCO All purchases and expenses are initially paid by credit. 90% of the annual expenses are expected to paid within the year. The tax rate for My My Baby is 27% Required: answer all of the parts in the next worksheet. "Student Answer 1) Prepare Budgeted Operating Income Statement in good form with the following supporting schedules A. Sales budget B. Production budget C. Factory overhead budget D. Selling & Administrative Expense Budget 2) Patrick would like to develop a new line of changing tables of My My Baby. The expected up front investment is $2 million. Should My My Baby invest based on the current financial situation? (hint cash flow What is the risk of relying on this budget? What do you suggest for My My Baby to do to mitigate this? Reminders: a) Prepare required budgets and supporting schedules in Requirementui tab. Feel free to add additional tab as required. For the additional tabs, please clearly indicate the relevant requirement being addressed. (ExIf you add one tab for Requirements, the tab should be named Requirement. 1 and should be placed right after Requirement.) b) Required 2 should be done on a separate tab. Activate Window c) Clearly label all your schedules and numbers with proper headings, labels, dates and units. Please show your work 1) Prepare Budgeted Operating Income Statement in good form with the following supporting schedules A. Sales budget B. Production budget C. Factory overhead budget D. Selling & Administrative Expense Budget 3 2) Patrick would like to develop a new line of changing tables of My My Baby. The expected up front investment is $2 million. Should My My Baby invest based on the current financial situation? (hint: cash flow What is the risk of relying on this budget? What do you suggest for My My Baby to do to mitigate this
