Ch. 22 Lab Activity Printem Mastery Problem Budgeting Learno Co manufactures and said one product, an actor classroom use, with two models, the Basic model and the Deluxe model. The company began operations on January 1, 2011, and is planning for 2017, ita second year of operations, by preparing budgets from its master budget. The company is trying to decide how many units to manufacture, how much it might speed on direct materials and direct labor, and what their factory overned expenses might be. In addition, the company is interested in sodoeting for selling and administrative costs, and in creating a budgeted income statement showing a prediction of net income for 2012 You have been asked to assist the controle of Leanca in preparing the 2012 budgets, Sales Budget The budort che et the per veure les was starting poilmand then sales cuantities are record for various factors such as planned nevertising and promotion, projected pricing changes, and expected ustry and general economic conditions. Leance has completed reviewing its prior year's sales and has prepared the following sales budget After wiewing locales det, vou note that the numbers have been omitted. The company's controler has told you that the units sold for the Basic and Drive models are expected to be the same rin Learn.co Sales Budget For the Year Ending December 31, 2012 Unit Sale Unit Selling Product Volume Price Basie Abacus 35 Deluxe Abacus 72,000 Total Sales $280,000 432,000 5720,000 Production Budget The auction budget should be integrated with the sales budget to ensure that production and sales are kept in balance during the year. The production budget estimates the number of units to be manufactured to Ch.22 Lab Activity Printem Production Budget The vouchen budget should be integrated with the sales budget to ensure that production and sales are kept in balance during the year. The production budget estimates the number of units to be manufactured to mert budgeted sales and desired Inventory levels You note that Learnca han omitted nx numbers from the following production budget and it in the missing amount. You may need to use numbers from the sales bullet you prepared LearnCo Production Budget For the Year Ending December 31, 2012 Units Baske Units Deluxe Expected units to be sold from Sales Budgiet) Desired ending inventory, December 31, 2012 1,000 3.000 Total units available Estimated beginning inventory, January 1, 2012 (1.050) (7.1001 Tot units to be produced Direct Materials Purchases Budget The direct matchould be integrated with the production but to ensure that production is not intended during the year Before you make any changes to the budget you review the information on the following Direct Materiais Data Table and enter the units to be produced from the Production thudget. After scanning the direct materiale purchases budget (with focus the Direct Materials Data Table). You serve that enco las emitted quite a few numbers from the budget. Fin the missing wounds. You may need to strumbers from the Direct Materials Data Table, or from the sales budget and production budget you prepared. When required, round your answers to the nearest allar Direct Materials Data Table Wood Pieces Beads Packages require per una task atacus Deluxe bacus $0.25 Total Cost per package Wood pieces Beads 10.25 Unts to be produced (from Production Budget) has acus Deluse Learnce Direct Materials Purchases Hudget For the Year Ending December 31, 2012 Direct Materials Wood Pieces Beads Packages required for production Baskhacus Deluxe abacus Desired Inventory, December 31, 2012 2,200 5.000 Total packages available Estimated Inventory, January 1, 202 (3.500) (4,500) Total packages to be purchased Unit price (per package KE Total direct materials to be purchased 572,888 Direct Laber Cast Budget Direct labor reeds from the direct labor cost budget should be coordinated between the production and personnel departments so that there will be enough tabor available for production Ch. 22 Lab Activity Printem $0.25 $0.25 Cost per package Wood places Beads Units to be produced (from Production Budget) Basic abacus Total Deluxe abacus LearnCo Direct Materials Purchases Budget For the Year Ending December 31, 2012 Direct Materials Wood Pieces Beads Packages required for production Basic abacus Deluxe abacus Desired Inventory, December 31, 2012 2,200 5,000 Total packages available (3,500) (4.500) Total packages to be purchased Un price (per package) Total direct materials to be purchased Estimated wventory, January 1, Nova $72,888 Direct Labor Cost Budget Direct labor needs from the direct labor cost budget should be coordinated between the production and personnel departments so that there will be enough tabor available for production Direct Labor Cost Budget Direct Labor needs from the direct labor cost budget should be coordinated between the production and personnel departments so that there will be enough tabor available for production Before you make any changes to the budget, you review the information on the following Oirect Labor Data Table and enter the units to be produced from the Production Budget Aner scanning the Direct Labor Cost Budget (which follows the Direct Labor Data Table). You observe that came has omitted quite a few numbers from the budget. Fit in the missing amounts. You may need to use numbers from the Direct Labor Data Table, or from the sales budget, reduction budget and direct materials purchases budget you prepared. When required, round your answers to the nearest Direct Labor Data Table Gluing Assembly Hours required perti Basic abacus 0.10 0.10 Deluxe abacus 0.10 0.20 Labor hourly rate Guing $12 Assembly $17 Units to be produced (from Production Basic lacus Deluxe Abacus I LearnCo Direct Labor Cost Budget For the Year Ending December 31, 2012 Gluing Assembly Hours required for production Basi abacus Total Deluxe whecus ID Total Hourly me Total Grect labor cost $273,995 Factory Overhead Cost Budget The fedory w cost budget should be integrated with the production budget to ensure that production is not interrupted during the year. The budget may be oported by departmental schedules, which nemally separate factory overhead costs into fived and will costs so that department managers may monitor and evaluate costs during the year. For simplity, Lambo has not separated costs in this manner After reviewing the following factory overhead cont Budget you note that leamCo has completed the budget with the exception of one amount in the missing amount Learnco Factory Overhead Cost Budget For the Year Ending December 31, 2012 Indirect factory wages 15,400 Power and Depreciation of plant and guipment 1,450 Total factory overhead cost $11,100 Cost of Goods Sold Budget 1 The cost of goods sold baget integrates the direct materiais purchases budget direct labor cost Budget, and factory overhead cont budger. Estimated and desired Inventories for direct materials, work in proces, and finished goods must also be integrated into the cost of goods sold budget Complete the preparation of the cet of goods sold budget for Leamco, uning information that follows provided by the controller, and using the previous bodpets you have prepared LearnCo Cost of Goods Sold Budget For the Year Ending December 31, 2012 Finished goods inventory, January 1, 2012 $9,870 $9,870 12,010 Ch. 22 Lab Activity Learno Cost of Goods Sold Budget For the Year Ending December 31, 2012 Finished goods inventory, January 1, 2012 Wors in process inventory, January 1, 2012 Direct materials: Direct materials invertory, January 1, 2012 12,000 Direct materiale purchases Cont of direct material avatable for use Die materials inventory, December 31, 2012 (1.8001 Cost of direct material placed in production Direct labor Factory overhead Tatal manufacturing costs Total work in process during period Work in process inventory, December 31, 2012 Cost of goods manufactured Cost finished good valable for sale Finished goods boventory, December 1, 2012 Cost of goods sold (1,250) (9.500) Selling/Admin. Expenses Budget The sales budget is often used as the starting point for the selling and administrative expenses budget. For example, a budgeted increase in sales may require more advertising expenses. Learn has prepared its Play Selling/Admin Expenses Budget The sales budgets assed as the varting point for these and administrative expenses rulet For example, budgeted increase in sales require more advertising expenses. Learco has preparedits eling and ministrative expenses budget as follows. This budget is merely reviewed by you for use on the budgeted income statement Learnce Selling and Administrative Expenses Budget For the Year Ending December 31, 2012 Seing expenses Sales salaries experts $45,000 Advertising expense 15,000 Travel expense 3,400 Total sing expenses 565,400 Administrative expenses Oncers are expense $35,000 Oceas expert 35,000 Once rentene 26.000 Omceruppesexpense 6,400 Miscellaneous administrative expenses 1.600 Total anstrative expenses 154,000 Total selling and administrative $219.400 Budgeted Income Statement The budgeted income statement is prepared by integrating the sales budget, cost of good old budget and sing and administrative expenses budget. Additional information that may be helpful in preparing the budgeted income statement are on the following Budgeted scome Statement Data Table Review Bured Income Statement Data Table, then complete the budgeted income statement that follows the table. Round the computed amount for income tax to the nearest whole dotar Budgeted Income Statement Data Table Ch. 22 Lab Activity Print Hudgeted Income Statement Data Table Interest revenue for the year $2,000 Interest expense for the year $1,500 LearnCo's income tax rate LearnCo Budgeted Income Statement For the Year Ending December 31, 2012 Revenue from sales Cost of goods sold Gross profit Selling and administrative expenses Selling expenses Administrative expenses Total seling and administrative expenses Operating income Other revenue and expense Interest revenue Interest expense Income before income tax Income tax Net Income Final Questions Ch. 22 Lab Activity 1. Lamco believes that sales of the Deluxe Abacus model may decrease in 2012. I Deluxe abacus sales are, what will be the effect on Leamco income before income tax Forlichty, ignore any change in Cost of Goods Sold 2.1 Leamco ler Deluxe Abacus units in 2012, it will break even the company will have were income before income tax) b. Learco will have a net loss before income taxi te Del Abacus units in 2012 LeamCo wil still have positive Income before income tax if it werer Deluxe Abacus units in 2012. 2. Lama's vancor for bead packages is expected to double its price per package of beads the occurs what we be the effect on Learno income before income tax a. If the price for bead packages doutes, LeamCo wil break even the company will tave per income before income tax). b. LearnCo will have a loss before income tax if the price for a packages doubles Lame will still have positive income before income tax the price for bead packages doubles 9. Ce aware that is ons or the dung part of the manufacturing process my crew to $15.00 per hour due to changes in minimum wage in its this occurs what will be the effect on Lama's income before income taxt * Leam will have positive income before income tax if Gluing labor continue to $15.00 per how If in labor costs increase to $15.00 per hour, Lance will break even the company will have no come before income tax) cance will have a lot forencome taxit Guingabor costs increase to $15.00 per hour 4. Lemos controller tries that the company can decrease its selling expense by 10% and its administrative expenses by 15. How much would income before Income tax or the expense cuts are mplemer Round your answer to the newest dotar Cek My Wort