The sales budget often uses the prior year’s sales as a starting point, and then
ID: 2516276 • Letter: T
Question
The sales budget often uses the prior year’s sales as a starting point, and then sales quantities are revised for various factors such as planned advertising and promotion, projected pricing changes, and expected industry and general economic conditions. LearnCo has completed reviewing its prior year’s sales and has prepared the following sales budget.
After reviewing LearnCo’s sales budget, you note that three numbers have been omitted. The company’s 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.
Points:
3 / 3
Production Budget
The production budget should be integrated with the sales budget to ensure that production and sales are kept in balance during the year. The production budget estimates the number of units to be manufactured to meet budgeted sales and desired inventory levels.
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.
Points:
6 / 6
Direct Materials Purchases Budget
The direct materials purchases budget should be integrated with the production budget to ensure that production is not interrupted during the year. This budget estimates the quantities of direct materials to be purchased to support budgeted production, along with desired inventory levels of direct materials.
Before you make any changes to the budget, you review the information in the following Direct Materials Data Table and enter the units to be produced from the Production Budget panel. After scanning the direct materials purchases budget (which follows the Direct Materials Data Table), you observe that LearnCo has omitted quite a few numbers from the 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.
Points:
2 / 2
Points:
12 / 12
Direct Labor Cost Budget
Direct labor needs from the direct labor cost budget should be coordinated between the production and personnel departments so that there will be enough labor available for production.
Before you make any changes to the budget, you review the information in the following Direct Labor Data Table and enter the units to be produced from the Production Budget panel. After scanning the Direct Labor Cost Budget (which follows the Direct Labor Data Table), you observe that LearnCo has omitted quite a few numbers from the 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.
Points:
2 / 2
Points:
10 / 10
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.
Points:
1 / 1
Cost of Goods Sold Budget
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.
Points:
8 / 10
Selling/Admin Expenses Budget
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.
Budgeted Income Statement
The budgeted income statement is prepared by integrating the sales budget, cost of goods sold budget, and selling and administrative expenses budget. Additional information that may be helpful in preparing the budgeted income statement are in the following Budgeted Income Statement Data Table.
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. Enter all amounts as positive numbers.
Score: 44/52
LearnCo
Budgeted Income Statement
For the Year Ending December 31, 20Y2
1
Revenue from sales
?
2
Cost of goods sold
?
3
Gross profit
?
4
Selling and administrative expenses:
5
Selling expenses
?
6
Administrative expenses
?
7
Total selling and administrative expenses
?
8
Income from operations
?
9
Other revenue and expense:
10
Interest revenue
?
11
Interest expense
?
?
12
Income before income tax
?
13
Income tax
14
Net income
Points:
11 / 13
Final Questions
Budgeting affects the planning, directing, and controlling functions of management. LearnCo wishes to determine the sensitivity of some of its budget values to changes in the economy.
Using the information on the completed budget panels, 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 LearnCo’s income before income tax? For simplicity, ignore any change in Cost of Goods Sold.
LearnCo will have a net loss before income tax if it sells zero Deluxe Abacus units in 20Y2.
If LearnCo sells zero Deluxe Abacus units in 20Y2, it will break even (i.e., the company will have zero income before income tax).
LearnCo will still have positive income before income tax if it sells zero Deluxe Abacus units in 20Y2.
Points:
1 / 1
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 LearnCo’s income before income tax?
LearnCo will still have positive income before income tax if the price for bead packages doubles.
LearnCo will have a loss before income tax if the price for bead packages doubles.
If the price for bead packages doubles, LearnCo will break even (i.e., the company will have zero income before income tax).
Points:
1 / 1
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 LearnCo’s income before income tax?
LearnCo will still have positive income before income tax if Gluing labor costs increase to $15.00 per hour.
LearnCo will have a loss before income tax if Gluing labor costs increase to $15.00 per hour.
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).
Points:
1 / 1
4. LearnCo’s 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.
Points:
1 / 1
LearnCo Sales Budget For the Year Ending December 31, 20Y2 Product Unit Sales Volume Unit Selling Price Total Sales Basic Abacus $7.00 $252,000 Deluxe Abacus 468,000 Totals 72,000 $720,000Explanation / Answer
Solution:
Here are the missing figures:
LearnCo
Sales Budget
For the Year Ending December 31, 20Y2
Product
Unit Sales Volume
Unit Selling Price
Total Sales
Basic Abacus
36000
(252,000 / 7)
$7
$252,000
Deluxe Abacus
36000
(72,000 – 36,000)
$13
(468,000 / 36,000)
$468,000
Totals
72000
$720,000
Missing figures of production budget
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 Data Table
Wood Pieces
Beads
Packages required per unit:
Basic abacus
1
2
Deluxe abacus
2
3
Cost per package:
Wood pieces
$0.25
Beads
$0.25
Units to be produced (from Production Budget):
Basic abacus
35950
35950
Deluxe abacus
36,900
36,900
LearnCo
Direct Materials Purchases Budget
For the Year Ending December 31, 20Y2
Direct Materials
Wood Pieces
Beads
Total
Packages required for production:
Basic abacus
35950
(35,950*1)
71900
(35,950*2)
Deluxe abacus
73800
(36900*2)
110700
(36900*3)
Desired inventory, December 31, 20Y2
2,200
5,000
Total packages available
111950
187600
Estimated inventory, January 1, 20Y2
-3,500
-4,500
Total packages to be purchased
108,450
183,100
Unit price (per package)
$0.25
$0.25
Total direct materials to be purchased
$27,113
$45,775
$72,888
Direct Labor Data Table
Gluing
Assembly
Hours required per unit:
Basic abacus
0.1
0.1
Deluxe abacus
0.1
0.2
Labor hourly rate:
Gluing
$12.00
Assembly
$17.00
Units to be produced (from Production Budget):
Basic abacus
35950
35950
Deluxe abacus
36,900
36,900
LearnCo
Direct Labor Cost Budget
For the Year Ending December 31, 20Y2
Gluing
Assembly
Total
Hours required for production:
Basic abacus
3595
(35950*0.1)
3595
(35950*0.1)
Deluxe abacus
3690
(36900*.01)
7380
(36900*0.2)
Total
7285
10975
Hourly rate
$12
$17
Total direct labor cost
$87,420
$186,575
$273,995
LearnCo
Factory Overhead Cost Budget
For the Year Ending December 31, 20Y2
Indirect factory wages
$5,400
Power and light
$11,250
Depreciation of plant and equipment
1,450
Total factory overhead cost
$18,100
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Pls ask separate question for remaining parts
LearnCo
Sales Budget
For the Year Ending December 31, 20Y2
Product
Unit Sales Volume
Unit Selling Price
Total Sales
Basic Abacus
36000
(252,000 / 7)
$7
$252,000
Deluxe Abacus
36000
(72,000 – 36,000)
$13
(468,000 / 36,000)
$468,000
Totals
72000
$720,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.