1. 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 An accounting device used to plan and control resources of operational departments and divisions.budgets from its An integrated set of operating and financial budgets for a period of time.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 One of the major elements of the income statement budget that indicates the quantity of estimated sales and the expected unit selling price.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	36,000	$8	$288,000
   Deluxe Abacus	36,000	12	432,000
   Totals	72,000		$720,000

   Production Budget

   The A budget of estimated units to be manufactured to meet budgeted sales and desired inventory levels.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)	36,000	36,000
   Desired ending inventory, December 31, 20Y2	1,000	3,000
   Total units available	37,000	39,000
   Estimated beginning inventory, January 1, 20Y2	(1,050)	(2,100)
   Total units to be produced	35,950	36,900

   Direct Materials Purchases Budget

   The A budget that estimates the quantities of direct materials to be purchased to support budgeted production and desired inventory levels.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	$0.25
   Beads	$0.25
   Units to be produced (from Production Budget):
   Basic abacus
   Deluxe abacus

   LearnCo Direct Materials Purchases Budget For the Year Ending December 31, 20Y2
   	Direct Materials
   	Wood Pieces	Beads	Total
   Packages required for production:
   Basic abacus
   Deluxe abacus
   Desired inventory, December 31, 20Y2	2,200	5,000
   Total packages available
   Estimated inventory, January 1, 20Y2	(3,500)	(4,500)
   Total packages to be purchased
   Unit price (per package)	$	$
   Total direct materials to be purchased	$	$	$72,888

   Direct Labor Cost Budget

   Direct labor needs from the A budget that estimates direct labor hours and related cost needed to support budgeted production.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	$13
   Assembly	$18
   Units to be produced (from Production Budget):
   Basic abacus
   Deluxe abacus

   LearnCo Direct Labor Cost Budget For the Year Ending December 31, 20Y2
   	Gluing	Assembly	Total
   Hours required for production:
   Basic abacus
   Deluxe abacus
   Total
   Hourly rate	$	$
   Total direct labor cost	$	$	$292,255

   Factory Overhead Cost Budget

   The A budget that estimates the cost for each item of factory overhead needed to support budgeted production.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
   Depreciation of plant and equipment	1,450
   Total factory overhead cost	$18,100

   Cost of Goods Sold Budget

   The A budget of the estimated direct materials, direct labor, and factory overhead consumed by sold products.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	$2,000
   Direct materials purchases
   Cost of direct materials available for use	$
   Direct materials inventory, December 31, 20Y2	(1,800)
   Cost of direct materials placed in production	$
   Direct labor
   Factory overhead
   Total manufacturing costs
   Total work in process during period		$
   Work in process inventory, December 31, 20Y2		(1,250)
   Cost of goods manufactured
   Cost of finished goods available for sale			$
   Finished goods inventory, December 31, 20Y2			(1,500)
   Cost of goods sold			$

   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. LearnCo has prepared its selling and administrative expenses budget as follows. This budget is merely reviewed by you for use on the budgeted income statement.

   LearnCo Selling and Administrative Expenses Budget For the Year Ending December 31, 20Y2
   Selling expenses:
   Sales salaries expense	$45,000
   Advertising expense	15,000
   Travel expense	5,400
   Total selling expenses		$65,400
   Administrative expenses:
   Officers' salaries expense	$85,000
   Office salaries expense	35,000
   Office rent expense	26,000
   Office supplies expense	6,400
   Miscellaneous administrative expenses	1,600
   Total administrative expenses		154,000
   Total selling and administrative expenses		$219,400