Mastery Problem Budgeting Luanco LeamCo manufactures and is one product on about for rooms with tw models the basemel nethelemade the common 1.701, and is paring for its second year of operations by preparing from The company is trying to decide how many units to manufacture, how much it might spend on direct mark and tirector and what their factory overheden might be in conco interested in doing for naministrative costs, and in creating a bete income towing prediction of not come for 2012 You have been asked to as the color of Lain preparing the 202.hu Sales Budget The worden sex terra starting point, and then the quantities are reied for wrious factors who lives and promotion ping champs, Industry and general economic conditions. Lema as completed wing is prior per sales and spread the looming sales budget After reviewing Camcorcoles budget, you note that three rumbers habem omitted. The company's controller tas tout you that a uns tris for the basic and Defendere tid me thane rut in the missing amounts Learco Sales Budget For the Year Ending December 31, 2012 Unit Sales Unit Selling Total Product Volume Price Sales Basic Abacus $268.000 Deluxe Abacus 432,000 3-5 Chapter 22 Mastery (Mastery) Learn.co Sales Budget For the Year Ending December 31, 2012 Unit Sales Unit Selling Product Volume Price Basic Abacus Total Sales 2000 Deluxe Abacus $32.000 5720,000 Tocals 72,000 Production Budget The production Det 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 meant to be manufactured to meet budgeted sales and desired inventory You note that Larco has comitted x tumbers from the following production budget and to in the mis amounts. You may need to use numbers from the sets Datet you remenes Learno Production Budget For the Year Ending December 31, 2012 Units Basie Units Deluxe Expected units to be sold (from Sales Budget Desired ending inventory, December 31, 2012 1,000 3.000 Total units available 1,000 3,000 Demo anaing inventory, December 31, 2012 Totalt avable mated beginning inventory, January 1, 2012 Total units to be produced 11.050) (2.100 Direct Materials Purchases budget The direct the dette integrated with production better that production is not worrupted the Before you make any changes to the budget you review the information on the following Direct Materiais Data Tender the units to be produced to the production et Arget materials purchases budget (which follows the Direct Materials Data Table you serve that Laana has omitted towers from the toget. Faire un amounts you to tumbers from the Direct Materials Data Table, or from the sales budget and prodoction budget you prepared. When required, round your awers to the most co Direct Materials Data Table Wood Pieces Beads Packages required per unit Basic abacus 1 2 Deluxe abacus 2 3 Cost per package Wood places 50.25 Beads 30 25 Units to be produced (from Production Budget): Units to be produced (from Production Budget): Basic abacus Deluxe abacus Learn Co 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 Total packages available Estimated Inventory, January 1, 20Y2 Total packages to be purchased 2,200 5,000 (3,500) (4,500) Unit price (per package) X $ Total direct materials to be purchased $72,888 Direct Labor Cost Budget Der tabernos from the worst how to become and wants that there bort Before you make any changes to the budget you review the information on the Director de and internet to produced to get in the Cost Budget (which flows the Direct Labor Data Table you that Lean otted outerumbers to the budget in the singured to resto Labor Data Table, or from the sales de production budget and Grect me puchates budget you prepared. When to the rest Direct Labor Data Table Gluing Assembly Hours required penit Basic abacus 0.10 0.10 Deluxe abacus 0.10 0.20 Labor hourly rate Glung $11 Assembly $18 Units to be produced from Production Budget) Basic abacus Deluxe abacus Learn.co Direct Labor Cost Budget For the Year Ending December 31, 2012 LearnCo Direct Labor Cost Budget For the Year Ending December 31, 2012 Gluing Assembly Hours required for production Basic abacus Total Deluxe abacus Total Hourly rate Total direct labor cost $277.685 Factory Overhead Cost Budget The factory overhead co budget should be integrated with the production budget to enter that production is not interested during the year. This but may be red by departments who normaly separate factory overhead costs into feed and variable costs so that department managers my monitor and evaluate costs during the year Forty. Learn has not parte con manner After reviewing the fonowing factory overhead cost budget, you note that come has completed the tunget with the exertion at one amount in in the missing on LearnCo Factory Overhead Cost Budget For the Year Ending December 31, 2012 Indirect factory wages 55,400 Check My work more Check My Workeamang 55,400 Indirect factory wages Power and light Depreciation of plant and equipment Total factory overhead cost 1.450 $18,100 Cost of Goods Sold Budget The cost of goods sold budget integrates the direct materials purchases budget direct labor cost budget and factory evento de Estimated and desired inventories for direct me work in and finished goods must also be integrated into the cost of goods sold budget. Complete the preparation of the cost of goods sold budoit for Lamce, vling information that follows provided by the controter and wing the pres budgets you for Learco Cost of Goods Sold Budget For the Year Ending December 31, 2012 Finished goods inventory, January 1, 2012 19,870 Work in process inventory. Minuary 1, 2012 $2,010 Direct materials Direct materials inventory, January 1, 2012 $2,000 Direct materials purchases Cost of direct materials available for use Direct materials Inventory, December 31, 2012 (1,800) Cost of direct materiais placed in production 1:00 1.100) Direct materials entor. December 31, 2012 Cost or direct mais placed in production Direct labor Factory overhead Total manufacturing costs Total work process during pened Work in process inventory, December 31, 2012 Cost of goods manutactured Cost of finished goods available for sale Finished goods inventory, December 31, 2012 Cost of goods sole (1.2503 DI!! (1.500) Selling/Admin. Expenses Budget The sales budget is often used as the starting point for the selling and administrative pero budget for example, but increase in sales may require more advertising expenses Lunetas pred its selling and administrative expenses budget as follows. This budget merely reviewed by you for use on the budgeted income statement Learn Co Selling and Administrative Expenses Budget For the Year Ending December 31, 2012 Selling expenses: CE 365.400 ASVUPRESS For the Year Ending December 31, 2012 Seving expenses Sales salaries expense 345.000 Advertising expen 15,000 Travel expense Total selling Administrative expenses Officers' salaries expense $85,000 Orice are expense 35,000 Omice rent expense 26,000 omce supplies expense 6,400 Miscellaneous administrative expenses 1,600 Tocal administrative expenses Total selling and administrative expenses 154,000 $219,400 Budgeted Income Statement The budgeted income statement is prepared by integrating the budget, cost of goods sold budget, and selling and administrative expenses budget Actional information that may be intrebaring the budgeted income statement are on the following Budgeted Income Statement Data Table Review the Budgeted Income Statement Data Table, then complete the budgeted income statement that the table. Round the computed amount for income tax to the nearest while Budgeted Income Statement Data Table Budgeted Income Statement Data Table Interest revenue for the year $2,000 Interest expense for the year $1,500 Learn Co's income tax rate 40% LearnCo Budgeted Income Statement For the Year Ending December 31, 20Y2 Revenue from sales Cost of goods sold Gross profit Selling and administrative expenses: Selling expenses Administrative expenses Total selling and administrative expenses Operating income Other revenue and expense: Interest revenue DI ID Interest expense Income before income tax Income before income tax income tax Nutcome model Final Questions Budgeting afects the planning directing and contractions of management. La Co wishes to determine the sensitivity of one of tubuopet varies to changes in the Using the information on the concluded budgets, wer the totown cutis. Consider can contuan seperty, ung that her as the same, including the level of production of each 1. tamcee that tale of the Delose Abacus model may decrease in 2012. Ir kasabacus se wat will be the effect on come before income take for more change in Cost of Goods Sold Lacoes er Detone Abacus unta 2017, it will create the company will have vero income before comes B. Como will have a net loss before income tax isso Deuse Adecu Units n 2012 cleamCo will still have positive income before income tax als zero De Abac units in 2002 2. Leamco's vender for bead packages expected to double its price per package or beads. this cours, what will be the tecton Lacay Income before income tax? a. If the pace for bead packages doubles, Leancowit break even the company we have pero income before income tax) D. LearnCo will have a loss before income tax of the price for bead packages doubles cleanCo will still have positive income before income tax the price for bead packages oubles Chapter 22 Mastery (Mastery) TWITTER c. Learn will share se income before incomitere Deluxe Abacus units in 2012 2. Lemos vender for bead pada pected to double its prior per package of this cours, what will be the effect on Leone before income at the price for a packages doublesLearn Co will break even lav the company will have zero income before income tax) Learnce will have a low before income tax if the price for both packages outier e como will sell have protiver come before rome tax Ir the price to bad beckons volen 3. LOC aware that its labor prices for the lung part of the manufacturing process may increase to $15.00 per har due to changes in minimum wage laws in it to what will be the effect on Learno income before income tax? * Learno wel still have dontive income before income tax i Gluing aber contingene te $15.00 per hour DIY Guing labor costs increase to $15.00 per hour Lenco wil break even the company will have zero income before income tax) Leance will have a loss before income tax Gluing labor costs increase to $15.00 per hour 4. Leamos controller believes that the company can decrease telling expenses by 10% and its administrative expenses by 15%. How much would income before income tax increase if these expense cuts are implemented Round your answer to the nearest dollar