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1 See The Light Projected Income Statement For the Period Ending December 31, 20x1 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 @ $200 Total Selling and Administrative Expenses Net Profit $ 1.125,000.00 750,000.00 $ 375,000.00 $ 23,000.00 75,000.00 $ 98,000.00 $ 42,000.00 50,000.00 92,000.00 190,000.00 $ 185,000.00 1 See The Light Projected Balance Sheet As of December 31, 20x1 $ 34.710.00 67,500.00 8,000.00 Current Assets Cash Accounts Receivable Inventory Raw Material Lamp Kits Work in Process Finished Goods Total Current Assets Fixed Assets Equipment Accumulated Depreciation Total Fixed Assets Total Assets 500 @ $16.00 0 3000 @ $30.00 90,000.00 200 210.00 $ 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 Fixed and Variable Cost Determinations Unit Cost Calculations The projected cost of a lamp is calculated based upon the projected increases or decreases to current costs. The present costs to manufacture one lamp are: Lamp Kit: $16.0000000 per lamp Direct Labor 2.0000000 per lamp (4 lamps/hr.) Variable Overhead: 2.0000000 per lamp Fixed Overhead: 10.0000000 perlamp (based on normal capacity of 25,000 lamps) Cost per lamp: $30.0000000 per lamp Expected increases for 20x2 When calculating projected increases round to TWO ($0.00) decimal places. 1. Material Costs are expected to increase by 6.00%. 2. Labor Costs are expected to increase by 6.50%. 3. Variable Overhead is expected to increase by 5.00%. 4. Fixed Overhead is expected to increase to $280,000. 5. Fixed Administrative expenses are expected to increase to $62,000. 6. Variable selling expenses (measured on a per lamp basis) are expected to increase by 4.50% 7. Fixed selling expenses are expected to be $35,000 in 20x2. 8. Variable administrative expenses (measured a per lamp basis) are expected to increase by 5.50%. On the following schedule develop the following figures: 1- 20x2 Projected Variable Manufacturing Unit Cost of a lamp. 2- 20x2 Projected Variable Unit Cost per lamp. 3- 20x2 Projected Fixed Costs. PART 3 Budgets Division N has decided to develop its budget based upon projected sales of 43,000 lamps at $51.00 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. Selling 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 675 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 Total Production 43000 42,400 units (7.01) WUOL VI Goods 7 Sold Round dollars to two places, $##. (9.07) 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 19.08) Total Materials: Labor Overhead Cost of Goods Available Less: Ending Inventory, Finished Goods Cost of Goods Sold 19.09) (9.10) (9.11) (9.12) (9.13) (9.14) 7 Budgeted Income Statement Sales Cost of Goods Sold Gross Profit Selling Expenses & Admin. Expenses Net Income (10.01) 8 Cash Budget Assume actual cash receipts and disbursements will follow the pattem 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 tems 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. Al 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, $180,000 Round dollars to two places, $##.## 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 Budgeted Cash Balance before financing Needed Minimum Balance Amount to be borrowed (if any) Budgeted Cash Balance (10.06) (10.07) (10.08) (10.09) (10.10)