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PART 3 Budgets Division N has decided to develop its budget based upon projected sales of 39.000 lamps at $52.00 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 inventory of Lamp Kits to 575 pieces and decreasing the finished goods by 20%. Complete the following budgets 1 Production Budget Planned Sales Desired Ending Inventory of Finished Goods Total Needed Less: Beginning Inventory Total Production 38,400 units 17.01) 2 Materials Budget Lamp Kits Needed for Production Desired Ending Inventory Total Needed Less: Beginning Inventory Total Purchases Cost per piece Cost of Purchases (Round to two places, $##.#) 38,400 units 575 units 38,975 units 500 units {8.01) (8.02) {8.03) (8.04) $ $ 17.04 655,614.00 {8.05) (8.06) 3 Direct Labor Budget {8.07) Labor Cost Per Lamp Production Total Labor Cost (Round to two places, S#### $ {8.08) 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 $ $ 81,792.00 260,000.00 {8.09) (8.10) Total Factory Overhead (Round to two places, S##.##) $ 341,792.00 (8.11) 4 Factory Overhead Budget Overhead Allocation rate based on: 1. Number of Units Total Factory Overhead / Number of Units (Round to two places, S##.##) $8.90 9.01) 5 Cost of making one unit next year Cost of one Lamp Ke Labor Cost Per Lamp Factory overhead per unit $2.06 19.02) Total cost of one unit (Round to two places, $##.##) S 2 8.00 19.03) 6 Selling and Admin. Budget (9.04) Fixed Selling Variable Selling (Round to two places, $#.) Fixed Administrative Variable Administrative (Round to two places, S##.#) Total Selling and Administrative (Round to two places, S##.##) (9.05) (9.06) Round dollars to two places, $#### $ 90,000.00 19.07) Goods Sold Budget- Beginning Inventory. Finished Goods Production Costs: Materials: Lamp Kits: Beginning Inventory Purchased Available for Use Ending Inventory of Lamp Kits Lamp Kits Used In Production $ 9,798.00 (9.08) $ I $ Total Materials: Labor Overhead Cost of Goods Available Less: Ending Inventory. Finished Goods Cost of Goods Sold 468.400.00 79,104.00 341.792.00 $ (9.09) (9.10) (9.11) (9.12) (9.13) (9.14) 67,200.00 7 Bustented Income Statement Sales Cost of Goods Sold Gross Profit Selling Expenses & Admin Expenses Net Income (10.01) 8 Cash Busta Assume actual cash receipts and disbursements will follow the pattern below. (Note: Receivables and ayables of 12/31x1 will have a cash impact in 2012) - 16.00% of sales for the year are made in November and December. Since our customers have 60 day forms those funds will be collected be collected in January and February 19.00% of material purchases will be paid during the year, the remaining portion will be paid in Januar February 1. All other manufacturing and operating costs we paid for when incurred The budgeted depreciation expense is equal to 0.6% of the fixed manufacturing, selling and administrative expenses Minimum Cash Balance needed for 2012. $195,000 1 See The Light Projected Cash Budget For the Year Ending December 31, 2012 Round dollars to two places www Beginning Cash Balance Cash Inflows: Sales Collections: Account Receivable (Sales last year not collected) Sales made and collected in 2012 Cash Available (10.023 (10.03 (10.06 (10.05 Cash Outlows: Purchases Accounts Payable (Purchases last year) Purchases made and paid for in 2012 Other Manufacturing Costs Director Total Manufacturing Overhead Selling and Administrative Less: Depreciation Total Cash Outflows IIIIIIIIIIIIIIIIIIII (10.06 (10.07) (10.08) Budgeted Cash Balance before financing Needed Minimum Balance Amount to be borrowed (if any) (10.09) Budgeted Cash Balance (10.10) I See The Light Projected Balance Sheet As of December 31, 20x1 $ 34,710.00 67,500.00 Current Assets Cash Accounts Receivable Inventory Raw Material Lamp Kits Work in Process Finished Goods Total Current Assets 500 @ $16.00 8,000.00 0 3000 @ $30.00 $ 90,000.00 200,210.00 Fixed Assets Equipment Accumulated Depreciation Total Fixed Assets Total Assets $ 20,000.00 6,800.00 13,200.00 213,410.00 $ 54,000.00 54,000.00 Current Liabilities Accounts Payable Total Liabilities Stockholder's Equity Common Stock Retained Eamings Total Stockholder's Equity Total Liabilities and Stockholder's Equity $ 12,000.00 147.410.00 159.410.00 213,410.00 $ Unit Cost Calculations 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: Lamp Kit: Direct Labor. Variable Overhead: Fixed Overhead: $16.0000000 per lamp 2.0000000 per lamp (4 lamps/hr.) 2.0000000 per lamp 10.0000000 per lamp (based on normal capacity of 25,000 lamps) Cost per lamp: $30.0000000 per lamp Expected increases for 20x2 When calculating projected increases round to TWO ($0.00) decimal places. 1. Material Costs are expected to increase by 6.50%. 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 $260,000. 5. Fixed Administrative expenses are expected to increase to $58,000. 6. Variable selling expenses (measured on a per lamp basis) are expected to increase by 5.00% 7. Fixed selling expenses are expected to be $27.000 in 20x2. 8. Variable administrative expenses (measured a per lamp basis) are expected to increase by 2.00% 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

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