Question

I need assistance with Cost of Goods Sold Budget and on down please. Thank you! Direct...

I need assistance with Cost of Goods Sold Budget and on down please. Thank you!

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 on the following Direct Labor Data Table and enter the units to be produced from the Production Budget. 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.

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 $12
  Assembly $17
Units to be produced (from Production Budget):
  Basic abacus 35950
  Deluxe abacus 36900
LearnCo
Direct Labor Cost Budget
For the Year Ending December 31, 20Y2
Gluing Assembly Total
Hours required for production:
Basic Abacus 3595 3595
  Deluxe abacus 3690 7380
Total 7285 10975
Hourly rate × $12 × $17
Total direct labor cost $87420 $186575 $273,995

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.

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

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.

LearnCo
Cost of Goods Sold Budget
For the Year Ending December 31, 20Y2
Finished goods inventory, January 1, 20Y2 $9,870
Work in process inventory, January 1, 20Y2 $2,010
Direct materials:
  Direct materials inventory, January 1, 20Y2 $1,600
  Direct materials purchases
  Cost of direct materials available for use $
  Direct materials inventory, December 31, 20Y2 (1,440)
  Cost of direct materials placed in production $
Direct labor
Factory overhead
Total manufacturing costs
Total work in process during period $
Work in process inventory, December 31, 20Y2 (1,250)
Cost of goods manufactured
Cost of finished goods available for sale $
Finished goods inventory, December 31, 20Y2 (1,500)
Cost of goods sold $

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 on the budgeted income statement.

LearnCo
Selling and Administrative Expenses Budget
For the Year Ending December 31, 20Y2
Selling expenses:
  Sales salaries expense $45,000
  Advertising expense 15,000
  Travel expense 5,400
Total selling expenses $65,400
Administrative expenses:
  Officers' salaries expense $85,000
  Office salaries expense 35,000
  Office rent expense 26,000
  Office supplies expense 6,400
  Miscellaneous administrative expenses 1,600
Total administrative expenses 154,000
Total selling and administrative expenses $219,400

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 on 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.

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, 20Y2
Revenue from sales $
Cost of goods sold
Gross profit $
Selling and administrative expenses:
  Selling expenses $
  Administrative expenses
    Total selling and administrative expenses
Operating income $
Other revenue and expense:
  Interest revenue $
  Interest expense
Income before income tax $
Income tax
Net income $

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