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 $6 $216,000 Deluxe Abacus 36,000 14.00 504,000 Totals 72,000 $720,000 Production Budget 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 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 $0.20 Beads $0.20 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 ____________ ___________ $58,310 Direct Labor Cost 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 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 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 $1,600 Direct materials purchases ____________ Cost of direct materials available for use $___________ Direct materials inventory, December 31, 20Y2 (1,440) 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

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 Review the Budgeted Income Statement Data Table, then complete the budgeted income statement that follows the table. Round the computed amount for income tax to the nearest whole dollar. Budgeted Income Statement Data Table Interest revenue for the year $2,000 Interest expense for the year $1,500 LearnCos 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 $____ Interest expense ____ ____ Income before income tax $____ Income tax ____ Net income $____ Using the information on the completed budgets, answer the following questions. Consider each question separately, assuming that all other data remains the same, including the level of production of each model. 1. LearnCo believes that sales of the Deluxe Abacus model may decrease in 20Y2. If Deluxe abacus sales are zero, what will be the effect on LearnCos income before income tax? For simplicity, ignore any change in Cost of Goods Sold.(A, B, or C) a. If LearnCo sells zero Deluxe Abacus units in 20Y2, it will break even (i.e., the company will have zero income before income tax). b. LearnCo will have a net loss before income tax if it sells zero Deluxe Abacus units in 20Y2. c. LearnCo will still have positive income before income tax if it sells zero Deluxe Abacus units in 20Y2.

2. LearnCo's vendor for bead packages is expected to double its price per package of beads. If this occurs, what will be the effect on LearnCos income before income tax?(A, B, or C) a. If the price for bead packages doubles, LearnCo will break even (i.e., the company will have zero income before income tax). b. LearnCo will have a loss before income tax if the price for bead packages doubles. c. LearnCo will still have positive income before income tax if the price for bead packages doubles.

3. LearnCo is aware that its labor prices for the Gluing part of the manufacturing process may increase to $15.00 per hour due to changes in minimum wage laws in its state. If this occurs, what will be the effect on LearnCos income before income tax?(A,B,or C) a. LearnCo will still have positive income before income tax if Gluing labor costs increase to $15.00 per hour. b. If Gluing labor costs increase to $15.00 per hour, LearnCo will break even (i.e., the company will have zero income before income tax). c. LearnCo will have a loss before income tax if Gluing labor costs increase to $15.00 per hour. 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. $____