I See The Light Projected Income Statement For the Period Ending December 31, 20x1 3 4 5 $ 7 8 1,125,000.00 750,000.00 375,000.00 $ 16 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 18 19 20 27 28 29 30 31 38 39 40 41 42 49 50 51 52 53 60 61 62 63 64 71 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 73 74 75 82 83 84 85 86 93 94 95 96 97 104 105 106 107 108 109 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 5 Fixed and Variable Cost Determinations Unit Cost Calculations 6 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 Lamp Kit: $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. 49 50 51 52 2- 20x2 Projected Variable Unit Cost per lamp. 54 3- 20x2 Projected Fixed Costs. 55 56 4 I See The Light, Inc Schedule of Projected Costs 5 6 7 8 9 Variable Manufacturing Unit Cost 20x 1 Cost Projected Percent Increase 4.5 20x2 Cost Rounded to 2 Decimal Places 16 10 11 Lamp Kit 14 Labor 15 Variable Overhead 2 6 5 $16.72 $2.12 $2.10 {4.01) {4.02) {4.03) 2 20 $20.94 {4.04} 16 17 Projected Variable Manufacturing Cost Per Unit 18 21 22 23 Total Variable Cost Per Unit 20x 1 Cost 20x2 Cost Rounded to 2 Decimal Places Projected Percent Increase 3.5 2.5 3 2 3.11 2.05 20.94 {4.05) {4.06) {4.04) 20 24 25 Variable Selling 28 Variable Administrative 29 Projected Variable Manufacturing Unit Cost 30 31 32 Projected Total Variable Cost Per Unit 35 25 26.10 {4.07) 36 37 38 Schedule of Fixed Costs 20x1 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 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] 4 PART 3 Budgets 10 11 12 13 Division N has decided to develop its budget based upon projected sales of 39,000 lamps at 14 $49.00 per lamp. 20 The company has requested that you prepare a master budget for the year. This budget is to be used 21 for planning and control of operations and should be composed of: 22 23 1. Production Budget 24 30 2. Materials Budget 31 32 3. Direct Labor Budget 33 34 4. Factory Overhead Budget 40 41 5. Selling and Administrative Budget 42 43 6. Cost of Goods Sold Budget 44 50 7. Budgeted Income Statement 51 52 8. Cash Budget 53 54 Notes for Budgeting: 60 61 62 The company wants to maintain the same number of units in the beginning and ending inventories of 63 work-in-process, and electrical parts while increasing the inventory of Lamp Kits to 750 pieces and 64 decreasing the finished goods by 20%. 70 71 Complete the following budgets 72 73 1 Production Budget 74 80 Planned Sales 81 Desired Ending Inventory of Finished Goods 82 Total Needed 83 Less: Beginning Inventory 84 90 Total Production 91 92 7224 39000 2,400 41400 500 {7.01} 3 4 Ready 2 Materials Budget 3 4. 5 12 13 14 15 16 23 24 Lamp Kits Needed for Production Desired Ending Inventory Total Needed Less: Beginning Inventory Total Purchases Cost per piece Cost of Purchases (Round to two places, $##.##) 40,900 units 750 units 41,650 units 500 units 41150 {8.01} {8.02) {8.03} {8.04} {8.05} {8.06} 25 3 Direct Labor Budget $ 2.00 {8.07} Labor Cost Per Lamp Production Total Labor Cost (Round to two places, $##.##) {8.08} 4 Factory Overhead Budget 79 80 81 82 89 90 91 92 93 100 101 102 103 104 105 106 107 108 109 110 111 Variable Factory Overhead: Variable Factory Overhead Cost Per Unit Number of Units to be produced Total Variable Factory Overhead (Round to two places, $##.##) Fixed Factory Overhead {8.09} {8.10} Total Factory Overhead (Round to two places, $##.##) {8.11} {9.01) {9.02) {9.03) {9.04) 4 5 4 Factory Overhead Budget 6 14 Overhead Allocation rate based on: 15 1. Number of Units 16 Total Factory Overhead / Number of Units 17 (Round to two places, $##.##) 18 26 5 Cost of making one unit next year 27 Cost of one Lamp Kit 28 Labor Cost Per Lamp 29 Factory overhead per unit 30 38 Total cost of one unit 39 39 (Round to two places, $##.##) 40 53 54 6 Selling and Admin. Budget 62 63 Fixed Selling 64 Variable Selling (Round to two places, $##.##) 65 Fixed Administrative 66 Variable Administrative (Round to two places, $##.##) 74 Total Selling and Administrative (Round to two places, $##.##) 75 VUOLUL Goods 7 Sold 76 Budget 77 Beginning Inventory, Finished Goods 78 Production Costs: 86 Materials: 87 Lamp Kits: 88 Beginning Inventory 89 Purchased 90 Available for Use 98 Ending Inventory of Lamp Kits 99 Lamp Kits Used In Production 100 115 Total Materials: 116 Labor 117 Overhead 118 Cost of Goods Available 119 Less: Ending Inventory, Finished Goods 120 Cost of Goods Sold 121 {9.05) {9.06) Round dollars to two places, $##.## {9.07) {9.08) {9.09) {9.10) {9.11) {9.12} 19.13) {9.14) 1 2 3 4 5 06 7 A 8 Ready 45 Assume actual cash receipts and disbursements will follow the pattem below: (Note: Receivables and 46 Payables of 12/31/x1 will have a cash impact in 20x2.) 55 56 1. 19.00% of sales for the year are made in November and December. Since our customers have 60 day terms 57 those funds will be collected be collected in January and February. 58 2. 85.00% of material purchases will be paid during the year, the remaining portion will be paid in Januay or February 59 3. All other manufacturing and operating costs are paid for when incurred. 68 4. The budgeted depreciation expense is equal to 0.6% of the fixed manufacturing, selling and administrative expenses. 69 5. Minimum Cash Balance needed for 20x2, $180,000 70 I See The Light 71 Projected Cash Budget 72 For the Year Ending December 31, 20x2 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) 81 82 83 84 85 94 95 96 97 98 107 108 109 110 111 120 121 122 123 124 125 126 127 128 129 130 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) Budgeted Cash Balance before financing Needed Minimum Balance {10.08) $ 180.000.000 Amount to be borrowed (if any) (10.09) Budgeted Cash Balance {10.10)