Sundancer Boats, Inc. manufactures paddle boats in various colors for 5-Star Resorts. Management is preparing the budget 2021 and has asked for the accountants 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 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 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 Pounds 2021 Ending Balance Ending Balance Per Unit 2020 2021 Cost/Pound 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 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 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 Total cost of ALL direct materials purchases 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 Manufacturing Overhead applied to the boats is related to machine hours used. 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 Management also anticipates the following fixed costs. These have increased slightly from 2020. Building and Equipment Depreciation Company Insurance Company Advertising 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 Administrative salaries and benefits Total selling and administrative expenses 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 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 Unit Cost Total *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 pounds pounds pounds hour hour