Sales Cost of Goods Sold Gross Profit Selling Expenses: Fixed Variable Administrative Expenses I See The Light Projected Income Statement For the Period Ending December 31, 20x1 25,000 lamps @ $45.00 @ $28.93 $ 1,125,000.00 723,250.00 $ 401,750.00 $ 23,000.00 (Commission per unit) @ $3.15 78,750.00 $ 101,750.00 40,750.00 Total Selling and Administrative Expenses: Net Profit 142,500.00 $ 259,250.00 I See The Light Projected Balance Sheet As of December 31, 20x1 Current Assets Cash Accounts Receivable Inventory Raw Material Figurines Electrical Sets Work in Process Finished Goods Total Current Assets Fixed Assets Equipment Accumulated Depreciation Total Fixed Assets Total Assets 500 @ $9.20 500 @ $1.25 0 3000 @ $28.9250 Current Liabilities Accounts Payable Total Liabilities Stockholder's Equity Common Stock Retained Earnings Total Stockholder's Equity Total Liabilities and Stockholder's Equity 34,710.00 67,500.00 4,600.00 625.00 86,775.00 194,210.00 $ 20,000.00 6,800.00 13,200.00 207,410.00 54,000.00 $ 54,000.00 $ 12,000.00 141,410.00 $ 153,410.00 207,410.00 9 Variable Cost of making one unit next year - used to calculate the Ending Inventory of Finished Goods Material cost per unit Labor Cost Per Lamp Variable Factory overhead per unit Total variable manufacturing cost of one unit 20x2 Cost Rounded to 7 Decimal Places $ 19.99412500 11.01} 10 Budgeted Operating Income Using Variable (Direct) Costing Sales Variable Cost of Goods Sold Assume FIFO (First-In, First-Out) Beginning Inventory, Finished Goods (Variable Costing) Production Costs: Materials: Figurines: Electrical Parts Lamp Shades: Labor: Variable Overhead: Total Variable Production Costs Cost of Goods Available For Sale Less: Ending Inventory, Finished Goods (Variable Costing) Variable Cost of Goods Sold Variable Selling (Round to two places, $###.####) Variable Administrative (Round to two places, $####.####) Total Variable Costs Contribution Margin Fixed Costs: Fixed Manufacturing Overhead Fixed Selling Fixed Administrative Total Fixed Operating Income, Variable Costing Operating Income, Absorption Operating Income, Variable Costing Excess (Absorption Costing Operating Income - Variable Costing Operating Income) Budgeted Fixed Overhead Budgeted Number of Units to be Produced Budgeted Fixed Cost Per Unit (Round to 7 decimals ######## 20x2 Cost Rounded to 2 Decimal Places {11.02} (11.03) {11.04} {11.05} (11.06) {11.07} {11.08} {11.09} {11.10} {11.11) Fixed Manufacturing Overhead in the Ending Inventory {11.12} Fixed Manufacturing Overhead in the Beginning Inventory {11.13} Increase (Fixed Manufacturing Overhead in the Ending Inventory-Fixed Manufacturing Overhead in the Beginning Inventory) $ 35,000.00 (11.14} The projected cost of a lamp is calculated based upon the projected increases or decreases to current costs. The present costs to manufacture one lamp are: Figurines Electrical Sets $9.2000000 per lamp 1.2500000 per lamp Lamp Shade Direct Labor: Variable Overhead: Fixed Overhead: Cost per lamp: 6.0000000 per lamp 2.2500000 per lamp (4 lamps/hr.) 0.2250000 per lamp 10.0000000 per lamp (based on normal capacity of 25,000 lamps) $28.9250000 per lamp Expected increases for 20x2 When calculating projected increases round to SEVEN decimal places, $0.0000000. 1. Material Costs are expected to increase by 6.00%. 2. Labor Costs are expected to increase by 3.00%. 3. Variable Overhead is expected to increase by 6.50%. 4. Fixed Overhead is expected to increase to $285,000. 5. Fixed selling expenses are expected to be $37,000 in 20x2. 6. Variable selling expenses (measured on a per lamp basis) are expected to increase by 4.50%. 7. Fixed Administrative expenses are expected to increase by $14,000. The total administrative expenses for 20x0 were $40,625.00, when 22,500 units were sold. Use the High-Low method to calculate the total fixed administrative expense. 8. Variable administrative expenses (measured on a per lamp basis) are expected to increase by 4.50%. The total administrative expenses for 20x0 were $40,625.00, when 22,500 units were sold. Use the High-Low method to calculate the variable administrative expense per lamp. On the following schedule develop the following figures: 1- 20x2 Projected Variable Manufacturing Unit Cost of a lamp. 2- 20x2 Projected Variable Unit Cost per lamp. 3- 20x2 Projected Fixed Costs. Variable Manufacturing Unit Cost Figurines Electrical Sets Lamp Shade Labor Variable Overhead Projected Variable Manufacturing Cost Per Unit Total Variable Cost Per Unit Variable Selling Variable Administrative 20x1 Variable Administrative 20x2 Projected Variable Manufacturing Unit Cost Projected Total Variable Cost Per Unit Schedule of Fixed Costs Schedule of Projected Costs 20x1 Cost Projected Percent Increase 20x2 Cost Rounded to 7 Decimal Places $9.7520000 (4.01) $1.3250000 (4.02) $6.3600000 {4.03} $2.3175000 {4.04} $0.2396250 (4.05) $19.9941250 (4.06) 20x1 Cost Projected Percent Increase 20x2 Cost Rounded to 7 Decimal Places $0.0500000 3.2917500 (4.07) (4.08) 0.0522500 (4.09} 19.994125 {4.06} 23.3381250 (4. 10} 20x1 Cost Projected Increase 20x2 Cost Rounded to 2 Decimal Places Fixed Overhead $ 285,000.00 (4.11) (normal capacity of lamps @_) Fixed Selling $ 37,000.00 {4. 12} Fixed Administrative 20x1 39,500.00 (4.13) Fixed Administrative 20x2 Projected Total Fixed Costs $ 53,500.00 (4.14) $ 375,500.00 (4.15) Big Al is about to begin work on the budget for 20x2 and they have requested that you prepare an analysis based on the following assumptions. Note: Remember, that we cannot sell part of a lamp, therefore to find the number of units you have to round up to the next complete unit. Furthuremore, to find the required sales in dollars it may be easier to find the number of units and then multiply by the selling price per unit. 1. For 20x2 the selling price per lamp will be $45.00. What is the projected contribution margin and contribution margin ratio for each lamp sold? Contribution Margin per unit (Round to seven places, $####.#### Contribution Margin Ratio (Round to seven places,% is two of those places ###.########%) 2. For 20x2 the selling price per lamp will be $45.00. How many lamps must be sold to breakeven? Breakeven sales in units (Round up to zero places, ######### units) 3. For 20x2 the selling price per lamp will be $45.00. The desired operating income in 20x2 is $261,750. What would sales in units have to be in 20x2 to reach the profit goal? Sales in units (Round up to zero places, ############ units) $21.6618750 {5. 01} 48. 13750% {5.02} 17, 335 units {5.03} {5.04} 4. For 20x2 the selling price per lamp will be $45.00. The company would like to have a operating income equal 5. to 31.00% of sales. If that is to be achieved, what would be the sales in units in 20x2? Sales in units (Round up to zero places, ############ units) If the company believed that it could only sell 25,000 lamps, what would the new selling price have to be so that the new contribution margin per unit is equal to last year's contribution margin per unit? {6.01} New Selling Price (Round up to two places, $#########.###) $ 46.22 {6.02} 6. For 20x2 the selling price per lamp will be $45.00 and the effective tax rate is 39%. How many units must be sold to generated a operating income of $200,000 after taxes? Sales in units (Round up to zero places, ########## units) {6.03} 7. If the company believes that the demand will be 27,500 units for the year. What selling price per lamp, rounded to two places, would generate a operating income of $827,500? New selling price per lamp (Round up to two places, $####,####.###) $ 67.09 {6.04} Keep in mind that the budget section builds on work from the previous parts, including Part I as well as the Background Information (tabs 1-4). You should continue to use the same file with your previously submitted answers. Division N has decided to develop its budget based upon projected sales of 37,000 lamps at $51.00 per lamp. The company has requested that you prepare a master budget for the year. This budget is to be used for planning and control of operations and should be composed of: 1. Production Budget 2. Materials Budget 3. Direct Labor Budget 4. Factory Overhead Budget 5. Selling and Administrative Budget 6. Cost of Goods Sold Budget 7. Budgeted Income Statement 8. Cash Budget Notes for Budgeting: The company wants to maintain the same number of units in the beginning and ending inventories of work-in-process, and electrical parts while increasing the figurines inventory to 700 pieces and increasing the finished goods by 25.00%. Complete the following budgets 1 Production Budget Planned Sales Desired Ending Inventory of Finished Goods (roundup to the next unit) Total Needed Less: Beginning Inventory Total Production 37,750 units {7.01} 2 Materials Budget Figurines Needed for Production Desired Ending Inventory Total Needed Less: Beginning Inventory Total Purchases Cost per piece Cost of Purchases (Round to two places, $##.###) Electrical Parts Needed for Production Desired Ending Inventory Total Needed Less: Beginning Inventory Total Purchases Cost per piece Cost of Purchases (Round to two places, $##.####) Lamp Shades - not inventoried they arrive from the shop next door Just-in-time. Needed for Production Desired Ending Inventory Total Needed Less: Beginning Inventory Total Purchases Cost per piece Cost of Purchases (Round to two places, $####.####) 3 Direct Labor Budget Labor Cost Per Lamp Production Total Labor Cost (Round to two places, $##.####) 4 Factory Overhead Budget Variable Factory Overhead: Variable Factory Overhead Cost Per Unit Number of Units to be Produced Total Variable Factory Overhead (Round to two places, $###.####) Fixed Factory Overhead {8.01} 700 units {8.02} 500 units {8.03} {8.04} {8.05} {8.06} {8.07} {8.08) {8.09} {8. 10} Total Factory Overhead (Round to two places, $####.####) {8. 11} Predetermined Factory Overhead Rate based upon the budgeted total factory OH, divided by the budgeted number of units to be produced, and then rounded to seven places, $###.####) $ 7.7845331 {8. 12} 6 5 Selling and Admin. Budget Fixed Selling Variable Selling (Round to two places, $##.####) Fixed Administrative Variable Administrative (Round to two places, $####.####) Total Selling and Administrative (Round to two places, $##.####) Cost of Goods Sold Budget - Assume FIFO (First-In, First-Out) and overhead is applied based on the number of units to be produced. Cost of making one unit next year Material cost per unit Labor Cost Per Lamp Factory overhead per unit Total cost of one unit (Round to seven places, $####.#### Beginning Inventory, Finished Goods Production Costs: Materials: Figurines: Beginning Inventory Purchased Available for Use Ending Inventory of Figurines Figurines Used In Production Electrical Parts Beginning Inventory Purchased Available for Use Ending Inventory of Electrical Parts Electrical Parts Used In Production Lamp Shades: Lamp Shades Used In Production Total Materials: Labor Overhead Cost of Goods Available Less: Ending Inventory, Finished Goods Cost of Goods Sold Round dollars to seven places, ######*##$ {9.01} {9.02} Round dollars to two places, $###### 86,775.00 {9.03} {9.04} {9.05} {9.06} $ 656,314.91 (9. 07} {9.08) {9.09} {9. 10} {9. 11} {9. 12} 7 Budgeted Income Statement Sales Cost of Goods Sold Gross Profit Selling Expenses & Admin. Expenses Net Operating Income 8 Cash Budget Assume actual cash receipts and disbursements will follow the pattern below: (Note: Receivables and Payables of 12/31/x1 will have a cash impact in 20x2.) 1. 16.00% of sales for the year are made in November and December. Since our customers have 60 day terms those funds will be collected be collected in January and February. 2. 88.00% of material purchases will be paid during the year, the remaining portion will be paid in Januay or February. 3. All other manufacturing and operating costs are paid for when incurred. 4. The budgeted depreciation expense is equal to 0.6% of the fixed manufacturing, selling and administrative expenses. 5. Minimum Cash Balance needed for 20x2, $195,000. I See The Light Projected Cash Budget For the Year Ending December 31, 20x2 Beginning Cash Balance Cash Inflows: Sales Collections: Account Receivable (Sales last year not collected) Sales made and collected in 20x2 Cash Available Cash Outflows: Purchases Accounts Payable (Purchases last year) Material purchases made and paid for in 20x2 Other Manufacturing Costs Direct Labor Total Manufacturing Overhead Selling and Administrative Less: Depreciation Total Cash Outflows Budgeted Cash Balance before financing Needed Minimum Balance Amount to be borrowed (if any) Budgeted Cash Balance Round dollars to two places, $##.## {10. 01} $ 67,500.00 (10. 02} $ 1,585,080.00 (10.03} $ 1,687,290.00 (10.04} {10.05} {10.06} {10.07} {10.08} {10.09} {10. 10}