LearnCo manufactures and sells one product, an abacus for classroom use, with two models, the Basic model and the Deluxe model. The company began operations on January 1, 20Y1, and is planning for 20Y2, its 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 spend on direct materials and direct labor, and what their factory overhead expenses might be. In addition, the company is interested in budgeting for selling and administrative costs, and in creating a budgeted income statement showing a prediction of net income for 20Y2.

You have been asked to assist the controller of LearnCo in preparing the 20Y2 budgets.

Sales Budget

The sales budget often uses the prior years sales as a starting point, and then sales quantities are revised for various factors such as planned advertising and promotion, projected pricing changes, and expected industry and general economic conditions. LearnCo has completed reviewing its prior years sales and has prepared the following sales budget.

After reviewing LearnCos sales budget, you note that three numbers have been omitted. The companys controller has told you that the units sold for the Basic and Deluxe models are expected to be the same. Fill in the missing amounts.

LearnCo Sales Budget For the Year Ending December 31, 20Y2
Product	Unit Sales Volume	Unit Selling Price	Total Sales
Basic Abacus	fill in the blank 57ea75f7e015faa_1	$8	$288,000
Deluxe Abacus	fill in the blank 57ea75f7e015faa_2	fill in the blank 57ea75f7e015faa_3	432,000
Totals	72,000		$720,000

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Review the preparation of the sales budget and use the information the controller provided.

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Production Budget

The production 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 meet budgeted sales and desired inventory levels.

You note that LearnCo has omitted six numbers from the following production budget and fill in the missing amounts. You may need to use numbers from the sales budget you prepared.

LearnCo Production Budget For the Year Ending December 31, 20Y2
	Units Basic	Units Deluxe
Expected units to be sold (from Sales Budget)	fill in the blank f03a4301b045029_1	fill in the blank f03a4301b045029_2
Desired ending inventory, December 31, 20Y2	1,000	3,000
Total units available	fill in the blank f03a4301b045029_3	fill in the blank f03a4301b045029_4
Estimated beginning inventory, January 1, 20Y2	(1,050)	(2,100)
Total units to be produced	fill in the blank f03a4301b045029_5	fill in the blank f03a4301b045029_6

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Be sure to include the expected units to be sold for each model from the Sales Budget. Then review the preparation of the production budget and how the amounts are computed.

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Direct Materials Purchases Budget

The direct materials purchases budget should be integrated with the production budget to ensure that production is not interrupted during the year.

Before you make any changes to the budget, you review the information on the following Direct Materials Data Table and enter the units to be produced from the Production Budget. After scanning the direct materials purchases budget (which follows the Direct Materials Data Table), you observe that LearnCo has omitted quite a few numbers from the budget. Fill in the missing amounts. You may need to use numbers from the Direct Materials Data Table, or from the sales budget and production budget you prepared. When required, round your answers to the nearest dollar.

Direct Materials Data Table
	Wood Pieces	Beads
Packages required per unit:
Basic abacus	1	2
Deluxe abacus	2	3
Cost per package:
Wood pieces	$0.20
Beads	$0.20
Units to be produced (from Production Budget):
Basic abacus	fill in the blank 8b52c0f82014048_1
Deluxe abacus	fill in the blank 8b52c0f82014048_2

LearnCo Direct Materials Purchases Budget For the Year Ending December 31, 20Y2
	Direct Materials
	Wood Pieces	Beads	Total
Packages required for production:
Basic abacus	fill in the blank 8b52c0f82014048_3	fill in the blank 8b52c0f82014048_4
Deluxe abacus	fill in the blank 8b52c0f82014048_5	fill in the blank 8b52c0f82014048_6
Desired inventory, December 31, 20Y2	2,200	5,000
Total packages available	fill in the blank 8b52c0f82014048_7	fill in the blank 8b52c0f82014048_8
Estimated inventory, January 1, 20Y2	(3,500)	(4,500)
Total packages to be purchased	fill in the blank 8b52c0f82014048_9	fill in the blank 8b52c0f82014048_10
Unit price (per package)	$fill in the blank 8b52c0f82014048_11	$fill in the blank 8b52c0f82014048_12
Total direct materials to be purchased	$fill in the blank 8b52c0f82014048_13	$fill in the blank 8b52c0f82014048_14	$58,310

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Review an example of the direct materials purchases budget, and the computations for each part of the budget. You will need to use the information on the Direct Materials Data Table in your computations.

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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 labor available for production.

Before you make any changes to the budget, you review the information on the following Direct Labor Data Table and enter the units to be produced from the Production Budget. After scanning the Direct Labor Cost Budget (which follows the Direct Labor Data Table), you observe that LearnCo has omitted quite a few numbers from the budget. Fill in the missing amounts. You may need to use numbers from the Direct Labor Data Table, or from the sales budget, production budget, and direct materials purchases budget you prepared. When required, round your answers to the nearest dollar.

Direct Labor Data Table
	Gluing	Assembly
Hours required per unit:
Basic abacus	0.10	0.10
Deluxe abacus	0.10	0.20
Labor hourly rate:
Gluing	$11
Assembly	$17
Units to be produced (from Production Budget):
Basic abacus	fill in the blank 2c28dd067fb502d_1
Deluxe abacus	fill in the blank 2c28dd067fb502d_2

LearnCo Direct Labor Cost Budget For the Year Ending December 31, 20Y2
	Gluing	Assembly	Total
Hours required for production:
Basic abacus	fill in the blank 2c28dd067fb502d_3	fill in the blank 2c28dd067fb502d_4
Deluxe abacus	fill in the blank 2c28dd067fb502d_5	fill in the blank 2c28dd067fb502d_6
Total	fill in the blank 2c28dd067fb502d_7	fill in the blank 2c28dd067fb502d_8
Hourly rate	$fill in the blank 2c28dd067fb502d_9	$fill in the blank 2c28dd067fb502d_10
Total direct labor cost	$fill in the blank 2c28dd067fb502d_11	$fill in the blank 2c28dd067fb502d_12	$266,710

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Review an example of the direct labor cost budget, and the computations for each part of the budget. You will need to use the information on the Direct Labor Data Table in your computations.

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Factory Overhead Cost Budget

The factory overhead cost budget should be integrated with the production budget to ensure that production is not interrupted during the year. This budget may be supported by departmental schedules, which normally separate factory overhead costs into fixed and variable costs so that department managers may monitor and evaluate costs during the year. For simplicity, LearnCo has not separated costs in this manner.

After reviewing the following factory overhead cost budget, you note that LearnCo has completed the budget with the exception of one amount. Fill in the missing amount.

LearnCo Factory Overhead Cost Budget For the Year Ending December 31, 20Y2
Indirect factory wages	$5,400
Power and light	fill in the blank bacf3900f009050_1
Depreciation of plant and equipment	1,450
Total factory overhead cost	$18,100

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The cost of goods sold budget integrates the direct materials purchases budget, direct labor cost budget, and factory overhead cost budget. Estimated and desired inventories for direct materials, work in process, and finished goods must also be integrated into the cost of goods sold budget.

Complete the preparation of the cost of goods sold budget for LearnCo, using information that follows provided by the controller, and using the previous budgets you have prepared.

LearnCo Cost of Goods Sold Budget For the Year Ending December 31, 20Y2
Finished goods inventory, January 1, 20Y2			$9,870
Work in process inventory, January 1, 20Y2		$2,010
Direct materials:
Direct materials inventory, January 1, 20Y2	$1,600
Direct materials purchases	fill in the blank c54bc3ff3fa6033_1
Cost of direct materials available for use	$fill in the blank c54bc3ff3fa6033_2
Direct materials inventory, December 31, 20Y2	(1,440)
Cost of direct materials placed in production	$fill in the blank c54bc3ff3fa6033_3
Direct labor	fill in the blank c54bc3ff3fa6033_4
Factory overhead	fill in the blank c54bc3ff3fa6033_5
Total manufacturing costs		fill in the blank c54bc3ff3fa6033_6
Total work in process during period		$fill in the blank c54bc3ff3fa6033_7
Work in process inventory, December 31, 20Y2		(1,250)
Cost of goods manufactured			fill in the blank c54bc3ff3fa6033_8
Cost of finished goods available for sale			$fill in the blank c54bc3ff3fa6033_9
Finished goods inventory, December 31, 20Y2			(1,500)
Cost of goods sold			$fill in the blank c54bc3ff3fa6033_10

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