Question

NEAT Do It! Review 22-03 a-b Sunland Company is preparing its budgeted income statement for 2020. Relevant data pertaining to its sales, production, and direct materials budgets are as follows. Sales. Sales for the year are expected to total 1,400,000 units. Quarterly sales are 19%, 23%, 27%, and 31%, respectively. The sales price is expected to be $41 per unit for the first three quarters and $45 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 15% higher than the budgeted sales for the first quarter of 2020. Production Management desires to maintain the ending finished goods inventories at 19% of the next quarter's budgeted sales volume. Direct materials. Each unit requires 2 pounds of raw materials at a cost of $10 per pound. Management desires to maintain raw materials inventories at 20% of the next quarter's production requirements. Assume the production requirements for first quarter of 2021 are 490,000 pounds. Sunland budgets 0.3 hours of direct labor per unit, labor costs at $12 per hour, and manufacturing overhead at $17 per direct labor hour. Its budgeted selling and administrative expenses for 2020 are $6,997,000. Calculate the budgeted total unit cost. (Round answer to 2 decimal places, 0.9. 12.25.) Total unit cost Prepare the budgeted multiple-step income statement for 2020. (Ignore income taxes.) SUNLAND COMPANY Budgeted Income Statement

Answer 1

{A} Budgeted total unit cost

Production budget
Sales	1400000
Opening stock of Q1 of 2020 is closing stock of Q4 of 2019 which is 19% of Q1 sales
Particulars	Q1 {19%}	Q2{23}	Q3 {27}	Q4 {31}	Q1 2021
Sales	266000	322000	378000	434000	305900
Closing	61180	71820	82460	58121
Opening	-50540	-61180	-71820	-82460
Production	276640	332640	388640	409661
Total units	1407581

Material Purchase Budget	Quarters
Opening stock of Q1 of 2020 is closing stock of Q4 of 2019 which is 20% of Q1 sales
Particulars	1	2	3	4	Q1 of 2021
Production requirement	276640	332640	388640	409661	490000
Requirement for per unit of Production	2	2	2	2	2
Material for production	553280	665280	777280	819322	980000
Closing {20% of next quarter prod.req }	66528	77728	81932.2	98000
Opening	-55328	-66528	-77728	-81932.2	-98000
Purchase budget	564480	676480	781484.2	835389.8
Total units	2857834

Calculation of budgeted unit cost
Particulars	Denotion	Amount
Production units	10/ Pounds	14075810
	1407581*10
Labour	0.3Lad .hr /unit + Rs 12/ hr	5067291.6
	1407581*0.3*12
Manufacturing overhead	0.3Lad .hr /unit + Rs 17/ hr	7178663.1
	1407581*0.3*17
Total manufacturing cost		26321764.7
Units of production		1407581
Unit cost		18.7

{B}

Budgetted multiple-step income statement
Particulars	Q1 {19%}	Q2{23}	Q3 {27}	Q4 {31}	Total
Total Sales	10906000	13202000	15498000	19530000	59136000
	266000*41	322000*41	378000*41	434000*45
Purchases	5644800	6764800	7814842	8353898	28578340
	564480*10	676480*10	781484.2*10	835389.8*10
Change in Stock	-106400	-106400	-106400	243390	-75810
Opening	50540	61180	71820	82460	266000
Closing	61180	71820	82460	58121	273581
Cost of goods sold	5538400	6658400	7708442	8597288	28502530
Labour cost	957600	1159200	1360800	1562400	5040000
	266000*0.3*12	322000*0.3*12	378000*0.3*12	434000*0.3*12
manufacturing overhead	1356600	1642200	1927800	2213400	7140000
	266000*0.3*17	322000*0.3*17	378000*0.3*17	434000*0.3*17
Selling and administrative overhead					6997000
Profit	3053400	3742200	4500958	7156912	11456470