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 sales budget below.

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.

LearnCo
Sales Budget
For the Year Ending December 31, 2016
Product	Unit Sales Volume	Unit Selling Price	Total Sales
Basic Abacus		$8.00	$288,000
Deluxe Abacus			432,000
Totals	72,000		$720,000

You note that LearnCo has omitted six numbers from the 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, 2016
	Units Basic	Units Deluxe
Expected units to be sold (from Sales Budget)
Plus desired ending inventory, December 31, 2016	1,000	3,000
Total
Less estimated beginning inventory, January 1, 2016	1,050	2,100
Total units to be produced

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 Direct Materials Data Table below and enter the units to be produced from the Production Budget panel. After scanning the direct materials purchases budget (which is found below 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.

Direct Materials Data Table
	Wood Pieces	Beads
Packages required per unit:
Basic abacus	1	2
Deluxe abacus	2	3
Cost per package:
Wood pieces	$0.30
Beads	$0.30
Units to be produced (from Production Budget):
Basic abacus
Deluxe abacus

LearnCo
Direct Materials Purchases Budget
For the Year Ending December 31, 2016
	Wood Pieces	Beads	Total
Packages required for production:
Basic abacus
Deluxe abacus
Plus desired inventory, December 31, 2016	2,200	5,000
Total
Less estimated inventory, January 1, 2016	3,500	4,500
Total packages to be purchased
Unit price (per package)	x	x
Total direct materials to be purchased			$87,465

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 Direct Labor Data Table below and enter the units to be produced from the Production Budget panel. After scanning the Direct Labor Cost Budget (which is below 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.

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	$11.00
Assembly	$17.00
Units to be produced (from Production Budget):
Basic abacus
Deluxe abacus

LearnCo
Direct Labor Cost Budget
For the Year Ending December 31, 2016
	Gluing	Assembly	Total
Hours required for production:
Basic abacus
Deluxe abacus
Total
Hourly rate	x	x
Total direct labor cost			$266,710 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 Budgeted Income Statement Data Table below. Review the Budgeted Income Statement Data Table, then complete the budgeted income statement, found below the table. Round the calculated 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 LearnCo’s income tax rate 40% LearnCo Budgeted Income Statement For the Year Ending December 31, 2016 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 income: 10 Interest revenue 11 Other expenses: 12 Interest expense 13 Income before income tax 14 Income tax 15 Net income

Answer 1