Question one Razr-Tech Manufacturing Ltd produces specialised computer parts for computer manufacturers around the world. Apart from the central processing unit (CPU), graphics processing unit (GPU), motherboard and Random Access Memory (RAM), Razr also produces small microprocessors. Two of its microprocessors are the Snapdragon and Exynos. The Snapdragon is sold at $300 per unit while the Exynos is sold at $440 per unit. In 2023, demand for the Snapdragon is expected to be 24,000 units while demand for Exynos is expected to be 6,000 units. Estimated beginning inventory in 2023 for Snapdragon and Exynos are expected to be 600 and 300 units respectively, while the company desires to have ending inventory of 500 and 200 units respectively for Snapdragon and Exynos. Additional information for the production of Snapdragon and Exynos follows: Finished Components Snapdragon Exynos Requirements for each nished product: xe37 10 grams grams APQ8064 0 grams mm855 Plus 4 grams grams Direct labour 2 hours hours Direct Materials Information xe37 AP08064 mm855+ Cost per gram $2.00 $2.50 $1.50 Estimated beginning inventory in grams 6,000 1,500 2,000 Desired ending inventory in grams 5,000 1,000 2,500 Razr-Tech expects the average wage rate to be $36 per hour in 2023. Razr-Tech uses direct-labour hours to apply overhead. Each year the company determines the overhead application rate for the year based on the budgeted output for the year. The company maintain negligible work-in-progress inventory and expects the cost per unit for both the beginning and ending inventory of nished goods to be identical. Question one (continued) REQUIRED: a. iI. iii. iv. vI. vii. viii. Using EXCEL, prepare the following schedules or statements for 2023: Sales budget Production budget Direct materials purchases budget Direct labour budget Factory overhead budget (Hint: separate variable and xed) Cost of good sold and ending inventory budget Selling and administrative expense budget (Hint: Separate selling and administrative expense) Budgeted income statement. Snapdragon is a mature product and the sales manager believes that price can be increased by 10% to $330 without having an impact on sales. Additionally, the sales manager believes that Exynos, which is a new product that was introduced last year has great potential. He believes that reducing the price to $400 is likely to double the sales of Exynos to 12,000 units. Using the EXCEL spreadsheet developed in part A above, determine what effect the proposed changes will have on the company's after-tax operating income. (Hint: Do not develop another spreadsheet.) Would you recommend that Razr-Tech implement the proposed strategy? 4. Direct Labor Budget Production Requirement Direct Labor Hour Requirement Total Labor Hours Requirement Wage Rate Total Direct Labor Costs 5. Factor}:r Overhead Budget Variable: Indirect Materials Misc supplies and tools Indirect Labor Payroll Taxes and fringe benets Maintenance Costs Heat, Light Power Total Variable Overhead Variable Overhead Allocation Fixed Overhead Supervision Maintenance Costs Depreciation Heat, Light, and power Total Fixed Overhead Allocation Total Overhead Budgeted Production Applied Overhead per Unit 10,000.00 5,000.00 40,000.00 250,0 00.00 10,080.00 11,0000 0 326,0 80.00 120,000.00 20,000.00 71,330.00 43,420.00 254,750.00 Snapdragon 23,900.00 2.00 47,800.00 36.00 1,720,800.00 Snapdragon 237,963.73 185,909.16 423,872.89 23,900.00 17.74 Exynos 5,900.00 3.00 17,700.00 36.00 6 37,2000 0 Exynos 88,116.27 68,8 40.84 156,957.11 5,900.00 26.60 Y. Budgeted Selling and Administrative Expense Advertising Sales Salaries Travel and Entertainment DepreciationWarehouse Office Salaries Executuive Salaries Supplies DepreciationOffice 8. Budgeted Income Statement Sales Less: Cost of Goods Sold Gross Prot Less: Selling Expenses Administrative Expenses Net Income Income Tax After Tax Net Income Direct Materials Direct Labor OverheadApplied Cost of Goods Sold Sales Incremental Gross Prot 9,640,000.00 3,759,263.82 6,080,?3 6.18 265,000.00 380,000.00 5,435,736.18 1,630,720.85 3,805,015.33 Snapd ragon 624,000.00 1,?28,000.00 425,646.41 2,?7?,646.41 7,920,000.00 5,142,353.59 Selling Administrative 60,000.00 200,000.00 60,000.00 5,00 0.00 60,000.00 25000 0.00 4,000.00 6,000.00 265,000.00 380,000.00 Exvncs 348,000.00 1,296,000.00 319,234.81 1,9 63,234.81 5,280,000.00 3,316,765.19 8,459,118.?8 (6,080,736.18) 2.376.362.60