Question
PLEASE HELP ME. I have a 87% of it done but i can't figure out the rest. I need two things done ... 1. Cost
PLEASE HELP ME. I have a 87% of it done but i can't figure out the rest.
I need two things done ...
1. Cost of Goods Sold Budget
2. Question 4 - 4. LearnCos controller believes that the company can decrease its selling 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.
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.
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 in 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 |
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 | $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 | $ |
4. LearnCos controller believes that the company can decrease its selling 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.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started