I See The Light Projected Income Statement For the Period Ending December 31, 20x1 @ $30.00 $ 1,125,000.00 750,000.00 $ $ 375,000.00 Sales 25,000 lamps @ $45.00 Cost of Goods Sold 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 , 1 2 3 4 5 5 6 7 8 9 16 17 18 19 20 27 28 29 30 31 38 39 40 41 42 49 50 51 52 53 60 61 62 63 64 71 72 73 74 75 82 83 84 85 86 93 94 95 96 97 104 105 106 107 108 109 110 111 112 $ 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 $ 4 PART 1 Fixed and Variable Cost Determinations Unit Cost Calculations 5 6 Lamp Kit: 7 8 The projected cost of a lamp is calculated based upon the projected increases or decreases to 9 current costs. The present costs to manufacture one lamp are: 10 12 $16.0000000 per lamp 15 Direct Labor: 2.0000000 per lamp (4 lamps/hr.) 16 Variable Overhead: 2.0000000 per lamp 18 Fixed Overhead: 10.0000000 per lamp (based on normal capacity of 25,000 lamps) 19 20 Cost per lamp: $30.0000000 per lamp 21 22 Expected increases for 20x2 24 When calculating projected increases round to TWO ($0.00) decimal places. 25 26 1. Material Costs are expected to increase by 4.50%. 27 28 2. Labor Costs are expected to increase by 6.00%. 30 31 3. Variable Overhead is expected to increase by 5.00%. 32 33 4. Fixed Overhead is expected to increase to $300,000. 34 36 5. Fixed Administrative expenses are expected to increase to $58,000. 37 38 6. Variable selling expenses (measured on a per lamp basis) are expected to increase 39 by 3.50%. 40 42 7. Fixed selling expenses are expected to be $41,000 in 20x2. 43 44 8. Variable administrative expenses (measured a per lamp basis) are expected to 45 increase by 2.50%. 46 48 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. 49 50 51 52 54 55 56 3- 20x2 Projected Fixed Costs. 5 Schedule of Projected Costs 6 7 8 9 Variable Manufacturing Unit Cost 20x 1 Cost Projected Percent Increase 4.5 20x2 Cost Rounded to 2 Decimal Places 16 {4.01) 2 6 10 11 Lamp Kit 14 Labor 15 Variable Overhead 16 17 Projected Variable Manufacturing Cost Per Unit 18 $16.72 $2.12 $2.10 (4.02) 2 5 {4.03) 20 $20.94 {4.04} 21 22 23 Total Variable Cost Per Unit 20x 1 Cost Projected Percent Increase 3.5 20x2 Cost Rounded to 2 Decimal Places 24 3 2 2.5 3.11 2.05 20.94 {4.05) {4.06) (4.04) 20 25 Variable Selling 28 Variable Administrative 29 Projected Variable Manufacturing Unit Cost 30 31 32 Projected Total Variable Cost Per Unit 35 36 25 26.10 {4.07) 37 38 Schedule of Fixed Costs 20x 1 Cost 20x2 Cost Projected Percent Increase 250,000 20 $ 300,000.00 {4.08} lamps @_) $ 39 42 Fixed Overhead 43 (normal capacity of 44 Fixed Selling 45 Fixed Administrative 46 49 Projected Total Fixed Costs 50 51 23,000 42,000 78.26 38.1 41,000.00 58,000.00 {4.09) {4.10) $ 35,000 $ 399,000.00 {4.11} J A B C D E E F G H 11 up to the next complete unit. Furthuremore, to find the required sales in dollars it may be easier to find the 12 number of units and then multiply by the selling price per unit. 16 17 1. For 20x2 the selling price per lamp will be $45.00. What is the projected contribution margin and contribution 18 margin ratio for each lamp sold? 19 20 24 25 26 27 28 32 {5.01) {5.02) {5.03) 33 Contribution Margin per unit (Round to two places, $##.##) 34 35 Contribution Margin Ratio (Round to four places, % is two of those places ##.##%) 36 40 41 2. For 20x2 the selling price per lamp will be $45.00. The desired net income in 20x2 is $195,000. What 42 would sales in units have to be in 20x2 to reach the profit goal? 43 44 48 49 50 51 52 56 57 58 Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) 59 60 64 65 66 3 For 20x2 the selling price per lamp will be $45.00. If the fixed cost increase by $55,000.00 how many lamps 67 must be sold to breakeven? 68 72 73 74 75 76 80 81 82 83 84 85 Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) 86 {5.04) 4. For 20x2 the selling price per lamp will be $45.00. If the variable cost increase by $5.50 a unit how many lamps must be sold to breakeven? 4 5 6 7 8 9 9 10 11 12 13 18 19 Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) {6.01) For 20x2 the selling price per lamp will be $45.00. If the variable cost decreased by $5.50 a unit how many lamps must be sold to breakeven? 20 21 22 27 5. 28 29 30 31 36 37 38 Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) {6.02) If for 20x2 the selling price per lamp is increased to $50.50 a unit how many lamps must be sold to breakeven? 39 40 45 6. 46 47 48 49 54 55 56 57 58 63 64 65 66 7. 67 72 73 74 75 76 81 82 83 84 85 Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) {6.03) If for 20x2 the selling price per lamp is decreased to $39.50 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)