Okay, I know that was a lot. I filled in all of the blanks and did the math but I don't understand what I did. What was the change in actual 2021 unit sales and price compared to the 2022 Master Budget? Why did I use the 2021 variable cost and usage in the 2022 Master Budget? Why didn't I make changes or what would be the reason behind using these numbers? Was the business profitable in 2021? How does that compare to the business bottom line in the 2022 Master Budget? Thank you so much for your time and help!

Sales in 2020 were 500 units. They are bringing on a new customer and management is expecting a 35% increase in 2021. They will increase the selling price to $3,500 this year to account for anticipated rising costs. Sundancer, Inc. Sales Budget For the Year Ended December 31, 2021 Expected sales units Unit selling price Total sales $ $ 675 3,500 2,362,500 At the end of 2020, there were no boats left in inventory to sell in 2021. Management would like to start 2022 with inventory on hand. They would like to budget to end 2021 with 25 completed and finished units. Sundancer, Inc. Production Budget For the Year Ended December 31, 2021 Expected sales units Add: Desired ending finished goods units (ending balance 2021) Total required units Less: Beginning finished goods units (ending balance 2020) Required production units 675 25 700 700 Management expects to end 2020 with some direct materials. They want to make sure that at the end of 2021, they have enough direct materials on hand to start production right away in 2022. Expected ACLUSI Pounds Expected 2021 Ending Ending Per Unit Cost/Pound Balance Balance 2021 Plastic Parts Direct materials: 400 $ 2.00 800 4,000 Metal Parts Direct materials: 500 $ 0.50 1,000 5,000 Paint and Stickers Direct materials: 10 $ 5.00 20 100 nnnn Sundancer, Inc. Direct Materials Budget Sundancer, Inc. Direct Materials Budget For the Year Ended December 31, 2021 Required production units Plastic Parts Direct materials pounds per unit produced: Total pounds needed for production Add: Desired ending direct materials in pounds (ending balance 2021) Total materials required Less: Beginning direct materials in pounds (ending balance 2020) Direct materials purchases Cost per pound Total cost of Plastic Parts direct materials purchases Required production units Metal Parts Direct materials pounds per unit produced: Total pounds needed for production Add: Desired ending direct materials in pounds (ending balance 2021) Total materials required Less: Beginning direct materials in pounds (ending balance 2020) Direct materials purchases Cost per pound Total cost of Metal Parts direct materials purchases 700 400 280,000 4,000 284,000 800 283,200 2.00 566,400 $ $ 700 500 350,000 5,000 355,000 1,000 354,000 0.50 177,000 $ $ Required production units Paint and Stickers Direct materials pounds per unit produced: Total pounds needed for production Add: Desired ending direct materials in pounds (ending balance 2021) Total materials required Less: Beginning direct materials in pounds (ending balance 2020) Direct materials purchases Cost per pound Total cost of Paint and Stickers direct materials purchases 700 10 7,000 100 7,100 20 7,080 5.00 35,400 $ $ Total cost of ALL direct materials purchases $ $ 778,800 Management expects that it will take 25 hours of direct labor to manufacture each boat. Direct labor is billed at $20/hour. Sundancer, Inc. Direct Labor Budget For the Year Ended December 31, 2021 Units to be produced Direct labor time (hours) per unit Total required direct labor hours Direct labor cost per hour Total direct labor cost 700 25 17,500 20 350,000 $ $ Overhead for the company only exists of machine usage. It will take 100 machine hours per boat and the cost is $8/hour. Sundancer, Inc. Manufacturing Overhead Budget For the Year Ended December 31, 2021 Units to be produced Machine hours per unit Total required machine hours Machine cost per hour Total manufacturing overhead 700 100 70,000 8 560,000 $ $ Management also anticipates the following fixed costs, some anticipated changes from last year: Building and Equipment Depreciation Company Insurance Company Advertising Selling and Administrative Salaries and Benefits $60,000 $17,000 $123,000 $330,000 Sundancer, Inc. Selling and Administrative Expense Budget For the Year Ended December 31, 2021 Fixed expenses Building and Equipment Depreciation Company Insurance Company Advertising Selling and administrative salaries and benefits Total selling and administrative expenses $ $ $ $ $ 60,000 17,000 123,000 330,000 530,000 Management had to borrow some money from the bank to start the business five years ago. As a result, they interest expense. It is $10,000 per year. Management anticipates a 21% tax rate for 2021. Sundancer, Inc. Budget Income Statement For the Year Ended December 31, 2021 $ Sales *Cost of goods sold Gross profit Selling and administrative expenses Income from operations Interest expense Income before income taxes Income tax expense Net Income $ 2,362,500 1,620,000 742,500 530,000 212,500 10,000 202,500 42,525 159,975 $ $ * Supplemental Schedule - COGS Cost Budget per Unit Cost Element Quantity Plastic Parts Direct materials: 400 pounds Metal Parts Direct materials: 500 pounds Paint and Stickers Direct materials: 10 pounds Direct labor 25 hour Manufacturing overhead - machine hours 100 hour Total COGS Budget per Unit lull Unit Cost $ 2.00 $ $ 0.50 $ $ 5.00 $ $ 20.00 $ $ 8.00 $ $ Total 800.00 250.00 50.00 500.00 800.00 2,400.00 Management now wants the accountants to complete a data analysis to compare the budget to standard costs for 2021. We know that based on the budget that was set, if everything goes exactly like we budgeted; the company will earn net income of just under $160,000. But, how likely is that to happen? Let's discuss changes from budget and standard that occurred during 2021. Overall, the company was able to increase several efficiencies. However, the company also experienced some increased costs. Use this information to complete the CH24 Standard Costs tab; the green section. Monaco Sundancer Plastic parts direct materials: The company was able to reduce waste by 20 pounds! However, purchase price, net of discounts increase by $0.50/pound. This caused an increase in freight and receiving and handling by $0.25/pound. Metal parts direct materials: The company was also able to reduce waste in metal by 30 pounds! That was also beneficial because the price of metal, net of discounts increased $1.10/pound. Freight and receiving/handling also increased by $0.20/pound. Paint and stickers direct materials: The company was also able to reduce waste in paint by 3 pounds. There were no changes in price for paint and stickers. Direct labor: Employees were tasked with increasing equipment assembly and decreasing labor hours. They were successful in 2021 and brought hours down by 5/hours/unit! The company provided a $6/hour raise! This also lead to an increase of $2/hour in payroll taxes. Manufacturing overhead: As a result of the decrease in direct labor hours, manufacturing overhead came down. However, there was a slight increase of $2/hour for each of the plant utilities and clean up. 2021 BUDGET - Current Standard Predetermined Unit Costs 2021 ACTUAL - Current Standard Predetermined Unit Costs Pounds Per Unit Pounds Per Unit $ Plastic Parts Direct Materials: Metal Parts Direct Materials: Paint and Stickers Direct Materials: Direct Labor Hours: Manufacturing Overhead Machine Hours: 400 500 10 25 100 Usage Measurement pounds pounds pounds hours hours $ $ $ $ Cost Per Cost Per Pound Unit 2.00 800.00 0.50 250.00 $ 50.00 20.00 $ 500.00 8.00 $ 800.00 35.50 $ 2,400.00 Plastic Parts Direct Materials: Metal Parts Direct Materials: Paint and Stickers Direct Materials: Direct Labor Hours: Manufacturing Overhead Machine Hours: Usage Measurement pounds pounds pounds hours hours 380 470 7 20 40 5.00 Cost Per Cost Per Pound Unit 3.00 $ 1,140.00 2.00 $ 940.00 5.00 $ 35.00 28.00 $ 560.00 12.00 $ 480.00 50.00 $ 3,155.00 $ $ $ $ $ 2021 STANDARD COST BUDGET - Current Standard Predetermined Unit Costs 2022 STANDARD COST BUDGET - Current Standard Predetermined Unit Costs Pounds Per Unit Usage Measurement Cost Per Pound Pounds Per Unit Usage Measurement Cost Per Pound 400 pounds 380 $ $ pounds Direct Materials Price and Quantity Standard Plastic Parts Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste 2.00 1.50 0.25 0.25 Direct Materials Price and Quantity Standard Plastic Parts Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste 3.00 2.00 0.50 0.50 S $ 375 25 375 5 500 pounds $ 470 pounds Direct Materials Price and Quantity Standard Metal Parts Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste 0.50 0.40 0.05 0.05 Direct Materials Price and Quantity Standard Metal Parts Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste 2.00 1.50 0.25 0.25 S $ 450 50 450 20 10 pounds 7 7 pounds Direct Materials Price and Quantity Standard Paint and Stickers Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste 5.00 4.25 0.50 0.25 Direct Materials Price and Quantity Standard Paint and Stickers Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste 5.00 4.25 0.50 0.25 $ $ 5 5 5 2 25 hours 20 hours $ $ Direct Labor Price and Quantity Standard Direct Labor Hours: Hourly wage rate Cost of living adjustments Payroll taxes Other benefits Actual production Breaks Setup and cleaning 20.00 15.00 1.00 2.00 2.00 Direct Labor Price and Quantity Standard Direct Labor Hours: Hourly wage rate Cost of living adjustments Payroll taxes Other benefits Actual production Breaks Setup and cleaning 28.00 21.00 1.00 4.00 2.00 20 2 3 15 2 3 100 hours 40 hours Manufacturing Overhead Quantity Standard Manufacturing Overhead Manufacturing Insurance Manufacturing Plant Utilities Manufacturing Cleanup 4 times Direct Labor Hours 8.00 2.00 5.00 1.00 Manufacturing Overhead Quantity Standard Manufacturing Overhead Manufacturing Insurance Manufacturing Plant Utilities Manufacturing Cleanup 2 times Direct Labor Hours $ $ $ 12.00 2.00 7.00 3.00 2 2021 ACTUAL STANDARD COST BUDGET VARIANCE - Current Standard Predetermined Unit Costs Favorable is Postive | Unfavorable is Negative Usage Cost Per Pounds Per Unit Cost Per Measurement Pound Unit Plastic Parts Direct Materials: 20 pounds (1.00) $ (340.00) Metal Parts Direct Materials: 30 pounds $ (1.50) $ (690.00) Paint and Stickers Direct Materials: 3 pounds $ 15.00 Direct Labor Hours: 5 hours $ (8.00) $ (60.00) Manufacturing Overhead Machine Hours: 60 hours $ (4.00) $ 320.00 $ (14.50) $ (755.00) 2021-2022 STANDARD COST BUDGET VARIANCE - Current Standard Predetermined Unit Costs Pounds Per Unit Usage Measurement Cost Per Pound $ 20 pounds Direct Materials Price and Quantity Standard Plastic Parts Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste (1.00) (0.50) (0.25) (0.25) 0 20 30 pounds $ (1.50) (1.10) (0.20) (0.20) 0 30 pounds $ Direct Materials Price and Quantity Standard Metal Parts Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste Direct Materials Price and Quantity Standard Paint and Stickers Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste Direct Labor Price and Quantity Standard Direct Labor Hours: Hourly wage rate Cost of living adjustments Payroll taxes Other benefits Actual production Breaks Setup and cleaning = | 5 hours $ $ (8.00) (6.00) (2.00) 5 0 60 hours (4.00) Manufacturing Overhead Quantity Standard Manufacturing Overhead Manufacturing Insurance Manufacturing Plant Utilities Manufacturing Cleanup 4 times Direct Labor Hours (2.00) (2.00) 2 1. Luckily, the company got word of the huge increase in plastic and metal prices. They adjusted their actual unit selling price for the year to $4,750. However, they didn't sell the budgeted 675, they only sold 625 boats. 2. Based off the ACTUAL COSTS determined in 2021, compute the Supplemental Schedule for COGS. *Hint* Use Actual Standard Costs from Tab CH24 Standard Costs 3. Fixed cost for 2021 were as follows: Building and Equipment Depreciation Company Insurance Company Advertising Selling and Administrative Salaries and Benefits $65,000 $24,000 $125,000 $350,000 4. Management had to borrow some money from the bank to start the business five years ago. As a result, they still have some interest expense. It is $10,000 per year. Management anticipates a 21% tax rate for the next several years. Sundancer, Inc. Income Statement For the Year Ended December 31, 2021 $ Sales * Cost of goods sold Gross profit Selling and administrative expenses Income from operations Interest expense Income before income taxes Income tax expense Net Income $ 2,968,750 1,971,875 996,875 564,000 432,875 10,000 422,875 88,804 334,071 $ $ *Supplemental Schedule - COGS Cost per Unit Cost Element Plastic Parts Direct materials: Metal Parts Direct materials: Paint and Stickers Direct materials: Direct labor Manufacturing overhead - machine hours Total COGS per Unit Quantity 380 pounds 470 pounds 7 pounds 20 hour 40 hour 917 Unit Cost $ 3.00 $ $ 2.00 $ $ 5.00 $ $ 28.00 $ $ 12.00 $ $ Total 1,140.00 940.00 35.00 560.00 480.00 3,155.00 Sales in 2021 were 625 units. The company worked hard to bring on some new customers in 2022. Overall, they are expecting a 20% increase in units overall from 2021. Management will keep the increase of the selling price of the boats at $4,750 because they already fear of pricing themselves out of the market. Sundancer, Inc. Sales Budget For the Year Ended December 31, 2022 Expected sales units 750 Unit selling price 4,750 Total sales $ 3,562,500 At the end of 2021, there were 75 boats left in inventory to sell in 2022. They would like to budget to end 2022 with 10 completed and finished units. Sundancer, Inc. Production Budget For the Year Ended December 31, 2022 Expected sales units Add: Desired ending finished goods units (ending balance 2022) Total required units Less: Beginning finished goods units (ending balance 2021) Required production units 750 75 825 (75) 750 Management ended 2021 with some direct materials and wants to end 2022 with some as well. Pounds Expected Expected Actual Ending 2022 Per Unit Balance 2021 Ending Balance Cost/Pound 2022 Plastic Parts Direct materials: 20 $ (1.00) 2,000 1,000 Metal Parts Direct materials: 30 $ (1.50) 3,000 1,500 Paint and Stickers Direct materials: 3 $ 50 25 Sundancer, Inc. Direct Materials Budget For the Year Ended December 31, 2022 Required production units Plastic Parts Direct materials pounds per unit produced: Total pounds needed for production Add: Desired ending direct materials in pounds (ending balance 2022) Total materials required Less: Beginning direct materials in pounds (ending balance 2021) Direct materials purchases Cost per pound Total cost of Plastic Parts direct materials purchases 750 20 15,000 1,000 16,000 (2,000) 14,000 (1.00) (14,000) $ $ 750 30 22,500 1,500 24,000 (3,000) 21,000 (1.50) (31,500) $ $ Required production units Metal Parts Direct materials pounds per unit produced: Total pounds needed for production Add: Desired ending direct materials in pounds (ending balance 2022) Total materials required Less: Beginning direct materials in pounds (ending balance 2021) Direct materials purchases Cost per pound Total cost of Metal Parts direct materials purchases Required production units Paint and Stickers Direct materials pounds per unit produced: Total pounds needed for production Add: Desired ending direct materials in pounds (ending balance 2022) Total materials required Less: Beginning direct materials in pounds (ending balance 2021) Direct materials purchases Cost per pound Total cost of Paint and Stickers direct materials purchases 750 3 2,250 25 2,275 (50) 2,225 $ $ Total cost of ALL direct materials purchases $ (45,500) Management expects that it will take 20 hours of direct labor to manufacture each boat. Direct labor is billed at $28/hour. Sundancer, Inc. Direct Labor Budget For the Year Ended December 31, 2022 Units to be produced Direct labor time (hours) per unit Total required direct labor hours Direct labor cost per hour Total direct labor cost 750 20 15,000 28 420,000 $ $ Overhead for the company only exists of machine usage. It will take 40 machine hours per boat and the cost is $12/hour. Sundancer, Inc. Manufacturing Overhead Budget For the Year Ended December 31, 2022 Units to be produced Machine hours per unit Total required machine hours Machine cost per hour Total manufacturing overhead 750 40 30,000 12 360,000 $ $ Management also anticipates the following fixed costs, some anticipated changes from last year: Building and Equipment Depreciation Company Insurance Company Advertising Selling and Administrative Salaries and Benefits $55,000 $18,000 $150,000 $360,000 Sundancer, Inc. Selling and Administrative Expense Budget For the Year Ended December 31, 2022 Fixed expenses Building and Equipment Depreciation Company Insurance Company Advertising Selling and administrative salaries and benefits Total selling and administrative expenses $ $ $ $ $ 55,000 18,000 150,000 360,000 583,000 Management had to borrow some money from the bank to start the business five years ago. They finally paid off the loan in 2021. Therefore, there is no interest expense. Management anticipates a 21% tax rate for for the next several years. Sundancer, Inc. Budget Income Statement For the Year Ended December 31, 2022 $ Sales *Cost of goods sold Gross profit Selling and administrative expenses Income from operations Interest expense Income before income taxes Income tax expense Net Income 3,562,500 (566,250) 4,128,750 583,000 3,545,750 $ $ 3,545,750 744,608 2,801,143 $ * Supplemental Schedule - COGS Cost Budget per Unit Cost Element Plastic Parts Direct materials: Metal Parts Direct materials: Paint and Stickers Direct materials: Direct labor Manufacturing overhead - machine hours Total COGS Budget per Unit Quantity 20 pounds 30 pounds 3 pounds 5 hour 60 hour Unit Cost $ (1.00)| $ $ (1.50) $ $ $ $ (8.00) $ (4.00) $ $ Total (340.00) (690.00) 15.00 (60.00) 320.00 (755.00) Sales in 2020 were 500 units. They are bringing on a new customer and management is expecting a 35% increase in 2021. They will increase the selling price to $3,500 this year to account for anticipated rising costs. Sundancer, Inc. Sales Budget For the Year Ended December 31, 2021 Expected sales units Unit selling price Total sales $ $ 675 3,500 2,362,500 At the end of 2020, there were no boats left in inventory to sell in 2021. Management would like to start 2022 with inventory on hand. They would like to budget to end 2021 with 25 completed and finished units. Sundancer, Inc. Production Budget For the Year Ended December 31, 2021 Expected sales units Add: Desired ending finished goods units (ending balance 2021) Total required units Less: Beginning finished goods units (ending balance 2020) Required production units 675 25 700 700 Management expects to end 2020 with some direct materials. They want to make sure that at the end of 2021, they have enough direct materials on hand to start production right away in 2022. Expected ACLUSI Pounds Expected 2021 Ending Ending Per Unit Cost/Pound Balance Balance 2021 Plastic Parts Direct materials: 400 $ 2.00 800 4,000 Metal Parts Direct materials: 500 $ 0.50 1,000 5,000 Paint and Stickers Direct materials: 10 $ 5.00 20 100 nnnn Sundancer, Inc. Direct Materials Budget Sundancer, Inc. Direct Materials Budget For the Year Ended December 31, 2021 Required production units Plastic Parts Direct materials pounds per unit produced: Total pounds needed for production Add: Desired ending direct materials in pounds (ending balance 2021) Total materials required Less: Beginning direct materials in pounds (ending balance 2020) Direct materials purchases Cost per pound Total cost of Plastic Parts direct materials purchases Required production units Metal Parts Direct materials pounds per unit produced: Total pounds needed for production Add: Desired ending direct materials in pounds (ending balance 2021) Total materials required Less: Beginning direct materials in pounds (ending balance 2020) Direct materials purchases Cost per pound Total cost of Metal Parts direct materials purchases 700 400 280,000 4,000 284,000 800 283,200 2.00 566,400 $ $ 700 500 350,000 5,000 355,000 1,000 354,000 0.50 177,000 $ $ Required production units Paint and Stickers Direct materials pounds per unit produced: Total pounds needed for production Add: Desired ending direct materials in pounds (ending balance 2021) Total materials required Less: Beginning direct materials in pounds (ending balance 2020) Direct materials purchases Cost per pound Total cost of Paint and Stickers direct materials purchases 700 10 7,000 100 7,100 20 7,080 5.00 35,400 $ $ Total cost of ALL direct materials purchases $ $ 778,800 Management expects that it will take 25 hours of direct labor to manufacture each boat. Direct labor is billed at $20/hour. Sundancer, Inc. Direct Labor Budget For the Year Ended December 31, 2021 Units to be produced Direct labor time (hours) per unit Total required direct labor hours Direct labor cost per hour Total direct labor cost 700 25 17,500 20 350,000 $ $ Overhead for the company only exists of machine usage. It will take 100 machine hours per boat and the cost is $8/hour. Sundancer, Inc. Manufacturing Overhead Budget For the Year Ended December 31, 2021 Units to be produced Machine hours per unit Total required machine hours Machine cost per hour Total manufacturing overhead 700 100 70,000 8 560,000 $ $ Management also anticipates the following fixed costs, some anticipated changes from last year: Building and Equipment Depreciation Company Insurance Company Advertising Selling and Administrative Salaries and Benefits $60,000 $17,000 $123,000 $330,000 Sundancer, Inc. Selling and Administrative Expense Budget For the Year Ended December 31, 2021 Fixed expenses Building and Equipment Depreciation Company Insurance Company Advertising Selling and administrative salaries and benefits Total selling and administrative expenses $ $ $ $ $ 60,000 17,000 123,000 330,000 530,000 Management had to borrow some money from the bank to start the business five years ago. As a result, they interest expense. It is $10,000 per year. Management anticipates a 21% tax rate for 2021. Sundancer, Inc. Budget Income Statement For the Year Ended December 31, 2021 $ Sales *Cost of goods sold Gross profit Selling and administrative expenses Income from operations Interest expense Income before income taxes Income tax expense Net Income $ 2,362,500 1,620,000 742,500 530,000 212,500 10,000 202,500 42,525 159,975 $ $ * Supplemental Schedule - COGS Cost Budget per Unit Cost Element Quantity Plastic Parts Direct materials: 400 pounds Metal Parts Direct materials: 500 pounds Paint and Stickers Direct materials: 10 pounds Direct labor 25 hour Manufacturing overhead - machine hours 100 hour Total COGS Budget per Unit lull Unit Cost $ 2.00 $ $ 0.50 $ $ 5.00 $ $ 20.00 $ $ 8.00 $ $ Total 800.00 250.00 50.00 500.00 800.00 2,400.00 Management now wants the accountants to complete a data analysis to compare the budget to standard costs for 2021. We know that based on the budget that was set, if everything goes exactly like we budgeted; the company will earn net income of just under $160,000. But, how likely is that to happen? Let's discuss changes from budget and standard that occurred during 2021. Overall, the company was able to increase several efficiencies. However, the company also experienced some increased costs. Use this information to complete the CH24 Standard Costs tab; the green section. Monaco Sundancer Plastic parts direct materials: The company was able to reduce waste by 20 pounds! However, purchase price, net of discounts increase by $0.50/pound. This caused an increase in freight and receiving and handling by $0.25/pound. Metal parts direct materials: The company was also able to reduce waste in metal by 30 pounds! That was also beneficial because the price of metal, net of discounts increased $1.10/pound. Freight and receiving/handling also increased by $0.20/pound. Paint and stickers direct materials: The company was also able to reduce waste in paint by 3 pounds. There were no changes in price for paint and stickers. Direct labor: Employees were tasked with increasing equipment assembly and decreasing labor hours. They were successful in 2021 and brought hours down by 5/hours/unit! The company provided a $6/hour raise! This also lead to an increase of $2/hour in payroll taxes. Manufacturing overhead: As a result of the decrease in direct labor hours, manufacturing overhead came down. However, there was a slight increase of $2/hour for each of the plant utilities and clean up. 2021 BUDGET - Current Standard Predetermined Unit Costs 2021 ACTUAL - Current Standard Predetermined Unit Costs Pounds Per Unit Pounds Per Unit $ Plastic Parts Direct Materials: Metal Parts Direct Materials: Paint and Stickers Direct Materials: Direct Labor Hours: Manufacturing Overhead Machine Hours: 400 500 10 25 100 Usage Measurement pounds pounds pounds hours hours $ $ $ $ Cost Per Cost Per Pound Unit 2.00 800.00 0.50 250.00 $ 50.00 20.00 $ 500.00 8.00 $ 800.00 35.50 $ 2,400.00 Plastic Parts Direct Materials: Metal Parts Direct Materials: Paint and Stickers Direct Materials: Direct Labor Hours: Manufacturing Overhead Machine Hours: Usage Measurement pounds pounds pounds hours hours 380 470 7 20 40 5.00 Cost Per Cost Per Pound Unit 3.00 $ 1,140.00 2.00 $ 940.00 5.00 $ 35.00 28.00 $ 560.00 12.00 $ 480.00 50.00 $ 3,155.00 $ $ $ $ $ 2021 STANDARD COST BUDGET - Current Standard Predetermined Unit Costs 2022 STANDARD COST BUDGET - Current Standard Predetermined Unit Costs Pounds Per Unit Usage Measurement Cost Per Pound Pounds Per Unit Usage Measurement Cost Per Pound 400 pounds 380 $ $ pounds Direct Materials Price and Quantity Standard Plastic Parts Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste 2.00 1.50 0.25 0.25 Direct Materials Price and Quantity Standard Plastic Parts Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste 3.00 2.00 0.50 0.50 S $ 375 25 375 5 500 pounds $ 470 pounds Direct Materials Price and Quantity Standard Metal Parts Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste 0.50 0.40 0.05 0.05 Direct Materials Price and Quantity Standard Metal Parts Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste 2.00 1.50 0.25 0.25 S $ 450 50 450 20 10 pounds 7 7 pounds Direct Materials Price and Quantity Standard Paint and Stickers Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste 5.00 4.25 0.50 0.25 Direct Materials Price and Quantity Standard Paint and Stickers Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste 5.00 4.25 0.50 0.25 $ $ 5 5 5 2 25 hours 20 hours $ $ Direct Labor Price and Quantity Standard Direct Labor Hours: Hourly wage rate Cost of living adjustments Payroll taxes Other benefits Actual production Breaks Setup and cleaning 20.00 15.00 1.00 2.00 2.00 Direct Labor Price and Quantity Standard Direct Labor Hours: Hourly wage rate Cost of living adjustments Payroll taxes Other benefits Actual production Breaks Setup and cleaning 28.00 21.00 1.00 4.00 2.00 20 2 3 15 2 3 100 hours 40 hours Manufacturing Overhead Quantity Standard Manufacturing Overhead Manufacturing Insurance Manufacturing Plant Utilities Manufacturing Cleanup 4 times Direct Labor Hours 8.00 2.00 5.00 1.00 Manufacturing Overhead Quantity Standard Manufacturing Overhead Manufacturing Insurance Manufacturing Plant Utilities Manufacturing Cleanup 2 times Direct Labor Hours $ $ $ 12.00 2.00 7.00 3.00 2 2021 ACTUAL STANDARD COST BUDGET VARIANCE - Current Standard Predetermined Unit Costs Favorable is Postive | Unfavorable is Negative Usage Cost Per Pounds Per Unit Cost Per Measurement Pound Unit Plastic Parts Direct Materials: 20 pounds (1.00) $ (340.00) Metal Parts Direct Materials: 30 pounds $ (1.50) $ (690.00) Paint and Stickers Direct Materials: 3 pounds $ 15.00 Direct Labor Hours: 5 hours $ (8.00) $ (60.00) Manufacturing Overhead Machine Hours: 60 hours $ (4.00) $ 320.00 $ (14.50) $ (755.00) 2021-2022 STANDARD COST BUDGET VARIANCE - Current Standard Predetermined Unit Costs Pounds Per Unit Usage Measurement Cost Per Pound $ 20 pounds Direct Materials Price and Quantity Standard Plastic Parts Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste (1.00) (0.50) (0.25) (0.25) 0 20 30 pounds $ (1.50) (1.10) (0.20) (0.20) 0 30 pounds $ Direct Materials Price and Quantity Standard Metal Parts Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste Direct Materials Price and Quantity Standard Paint and Stickers Direct Materials: Purchase price, net of discounts Freight Receiving/handling Required materials Allowance for waste Direct Labor Price and Quantity Standard Direct Labor Hours: Hourly wage rate Cost of living adjustments Payroll taxes Other benefits Actual production Breaks Setup and cleaning = | 5 hours $ $ (8.00) (6.00) (2.00) 5 0 60 hours (4.00) Manufacturing Overhead Quantity Standard Manufacturing Overhead Manufacturing Insurance Manufacturing Plant Utilities Manufacturing Cleanup 4 times Direct Labor Hours (2.00) (2.00) 2 1. Luckily, the company got word of the huge increase in plastic and metal prices. They adjusted their actual unit selling price for the year to $4,750. However, they didn't sell the budgeted 675, they only sold 625 boats. 2. Based off the ACTUAL COSTS determined in 2021, compute the Supplemental Schedule for COGS. *Hint* Use Actual Standard Costs from Tab CH24 Standard Costs 3. Fixed cost for 2021 were as follows: Building and Equipment Depreciation Company Insurance Company Advertising Selling and Administrative Salaries and Benefits $65,000 $24,000 $125,000 $350,000 4. Management had to borrow some money from the bank to start the business five years ago. As a result, they still have some interest expense. It is $10,000 per year. Management anticipates a 21% tax rate for the next several years. Sundancer, Inc. Income Statement For the Year Ended December 31, 2021 $ Sales * Cost of goods sold Gross profit Selling and administrative expenses Income from operations Interest expense Income before income taxes Income tax expense Net Income $ 2,968,750 1,971,875 996,875 564,000 432,875 10,000 422,875 88,804 334,071 $ $ *Supplemental Schedule - COGS Cost per Unit Cost Element Plastic Parts Direct materials: Metal Parts Direct materials: Paint and Stickers Direct materials: Direct labor Manufacturing overhead - machine hours Total COGS per Unit Quantity 380 pounds 470 pounds 7 pounds 20 hour 40 hour 917 Unit Cost $ 3.00 $ $ 2.00 $ $ 5.00 $ $ 28.00 $ $ 12.00 $ $ Total 1,140.00 940.00 35.00 560.00 480.00 3,155.00 Sales in 2021 were 625 units. The company worked hard to bring on some new customers in 2022. Overall, they are expecting a 20% increase in units overall from 2021. Management will keep the increase of the selling price of the boats at $4,750 because they already fear of pricing themselves out of the market. Sundancer, Inc. Sales Budget For the Year Ended December 31, 2022 Expected sales units 750 Unit selling price 4,750 Total sales $ 3,562,500 At the end of 2021, there were 75 boats left in inventory to sell in 2022. They would like to budget to end 2022 with 10 completed and finished units. Sundancer, Inc. Production Budget For the Year Ended December 31, 2022 Expected sales units Add: Desired ending finished goods units (ending balance 2022) Total required units Less: Beginning finished goods units (ending balance 2021) Required production units 750 75 825 (75) 750 Management ended 2021 with some direct materials and wants to end 2022 with some as well. Pounds Expected Expected Actual Ending 2022 Per Unit Balance 2021 Ending Balance Cost/Pound 2022 Plastic Parts Direct materials: 20 $ (1.00) 2,000 1,000 Metal Parts Direct materials: 30 $ (1.50) 3,000 1,500 Paint and Stickers Direct materials: 3 $ 50 25 Sundancer, Inc. Direct Materials Budget For the Year Ended December 31, 2022 Required production units Plastic Parts Direct materials pounds per unit produced: Total pounds needed for production Add: Desired ending direct materials in pounds (ending balance 2022) Total materials required Less: Beginning direct materials in pounds (ending balance 2021) Direct materials purchases Cost per pound Total cost of Plastic Parts direct materials purchases 750 20 15,000 1,000 16,000 (2,000) 14,000 (1.00) (14,000) $ $ 750 30 22,500 1,500 24,000 (3,000) 21,000 (1.50) (31,500) $ $ Required production units Metal Parts Direct materials pounds per unit produced: Total pounds needed for production Add: Desired ending direct materials in pounds (ending balance 2022) Total materials required Less: Beginning direct materials in pounds (ending balance 2021) Direct materials purchases Cost per pound Total cost of Metal Parts direct materials purchases Required production units Paint and Stickers Direct materials pounds per unit produced: Total pounds needed for production Add: Desired ending direct materials in pounds (ending balance 2022) Total materials required Less: Beginning direct materials in pounds (ending balance 2021) Direct materials purchases Cost per pound Total cost of Paint and Stickers direct materials purchases 750 3 2,250 25 2,275 (50) 2,225 $ $ Total cost of ALL direct materials purchases $ (45,500) Management expects that it will take 20 hours of direct labor to manufacture each boat. Direct labor is billed at $28/hour. Sundancer, Inc. Direct Labor Budget For the Year Ended December 31, 2022 Units to be produced Direct labor time (hours) per unit Total required direct labor hours Direct labor cost per hour Total direct labor cost 750 20 15,000 28 420,000 $ $ Overhead for the company only exists of machine usage. It will take 40 machine hours per boat and the cost is $12/hour. Sundancer, Inc. Manufacturing Overhead Budget For the Year Ended December 31, 2022 Units to be produced Machine hours per unit Total required machine hours Machine cost per hour Total manufacturing overhead 750 40 30,000 12 360,000 $ $ Management also anticipates the following fixed costs, some anticipated changes from last year: Building and Equipment Depreciation Company Insurance Company Advertising Selling and Administrative Salaries and Benefits $55,000 $18,000 $150,000 $360,000 Sundancer, Inc. Selling and Administrative Expense Budget For the Year Ended December 31, 2022 Fixed expenses Building and Equipment Depreciation Company Insurance Company Advertising Selling and administrative salaries and benefits Total selling and administrative expenses $ $ $ $ $ 55,000 18,000 150,000 360,000 583,000 Management had to borrow some money from the bank to start the business five years ago. They finally paid off the loan in 2021. Therefore, there is no interest expense. Management anticipates a 21% tax rate for for the next several years. Sundancer, Inc. Budget Income Statement For the Year Ended December 31, 2022 $ Sales *Cost of goods sold Gross profit Selling and administrative expenses Income from operations Interest expense Income before income taxes Income tax expense Net Income 3,562,500 (566,250) 4,128,750 583,000 3,545,750 $ $ 3,545,750 744,608 2,801,143 $ * Supplemental Schedule - COGS Cost Budget per Unit Cost Element Plastic Parts Direct materials: Metal Parts Direct materials: Paint and Stickers Direct materials: Direct labor Manufacturing overhead - machine hours Total COGS Budget per Unit Quantity 20 pounds 30 pounds 3 pounds 5 hour 60 hour Unit Cost $ (1.00)| $ $ (1.50) $ $ $ $ (8.00) $ (4.00) $ $ Total (340.00) (690.00) 15.00 (60.00) 320.00 (755.00)