Question

Austin Laptop Plus company approached you as a Management Accounting expert to assist them in preparing their 2021 budget. They provided you with the following data:

• The company is manufacturing and selling TWO models of the branded Laptops: o Model 1

o Model 2

• Expected number of units to be sold in 2021

o Model 1: 30,000 units o Model 2: 20,000 units

• Expected selling Price:

o Model 1: $500 per unit

o Model 2: $400 per unit

• Each model requires 5 components to be finished/produced

o Camera (Model 1 has 4 Cameras, while Model 2 has only 2 Cameras). o Keypad

o Screen

o Frame

o Motherboard.

• Component purchasing prices are as follows:

o Camera: $30 o Keypads: $20 o Screen: $40 o Frame: $6

o Motherboard: $24

• No ending inventory of any component item (Direct Materials) or finished goods is

required.

• each Laptop model requires 5.5 hours of labor at a cost of $10.00 per hour to be manufactured.

• Manufacturing Overhead is allocated at a rate of $30 per Direct Labor Hour.

 

• Selling and Admin variable expense rates per unit of sales are sales commissions $3 and freight-out $2

• Selling and Admin fixed expenses include Depreciation $8,000 Salaries $2,000 and maintenance $3000 for each model

• Interest is $10,000 and Taxes are $50,000 Required:

 •

Prepare the following for 2021:

o Sales Budget

o Components (Direct Material Purchases) Budget o Direct Labor Budget

o An overhead Budget

o Selling and Administrative Budget

Prepare a budgeted income statement

Answer 1

Dear Student, please refer to the question below:
Question:

Axiom Mobile Plus company approached you as Management Accounting expert to assist them in preparing their 2013 budget.

They provided you with the following data:

Expected number of units to be sold in 2013

Model 1: 15,000 units

Model 2: 10,000 units

Expected selling Price

Model 1: $250

Model 2: $200

Each model requires 5 components (camera, keypad, screen, frame, and motherboard). Model 1 has 2 cameras, while model 2 has only 1 camera.

Component prices are as follows:

Camera: $15

Keypads: $10

Screen: $20

Frame: $3

Motherboard: $12

The company already had a beginning inventory of 3,000 units of each of the above components at a cost of:

Camera: $12.50

Keypads: $9

Screen: $18

Frame: $2.75

Motherboard: $11.50

No ending inventory of any component item or finished goods is required.

Both Mobile models need 5.5 hours of labor at a cost of $5.00 per hour.

Overhead is allocated at a rate of $15 per direct labor hour.

Required:

Prepare the following:

Sales Budget

Component Budget

Direct Labor Budget

An overhead Budget

Prepare a budgeted partial income statement till “Gross Profit Line”

----------------------------------------------- Ans:

Part 1)

The sales budget is as follows:

Axiom Mobile Plus Company
Sales Budget
	Sales	Selling	Total Sales (A*B)
	Volume (A)	Price (B)
Model 1	15,000	250	3,750,000
Model 2	10,000	200	2,000,000
Total Sales Revenue			$5,750,000

_____

Part B)

The component budget is given as follows:

Axiom Mobile Plus Company
Component Budget
	Camera	Keypads	Screen	Frame	MotherBoard	Total
Units Needed for Production:
Model 1	30,000 (15,000*2)	15,000	15,000	15,000	15,000
Model 2	10,000	10,000	10,000	10,000	10,000
Add Desired Ending Inventory	0	0	0	0	0
Total	40,000	25,000	25,000	25,000	25,000
Less Beginning Inventory	3,000	3,000	3,000	3,000	3,000
Total Units Needed (Purchase) [C]	37,000	22,000	22,000	22,000	22,000
Unit Price [D]	15	10	20	3	12
Total Component to be Purchased [C*D]	$555,000	$220,000	$440,000	$66,000	$264,000	$1,545,000

_____

Part C)

The direct labor budget is given as follows:

Axiom Mobile Plus Company
Direct Labor Budget
No of Units for Each Model:
Model 1	15,000
Model 2	10,000
Total Units (E)	25,000
Hour Required Per Unit (F)	5.5
Total Hours Needed for Production (E*F)	137,500
Rate Per Hour	5
Total Direct Labor Cost (137,500*5)	$687,500

_____

Part D)

The overhead budget is as follows:

Axiom Mobile Plus Company
Overhead Budget
Total Hours Needed for Production	137,500
Overhead Rate Per Hour	15
Total Overhead Cost (137,500*15)	$2,062,500

_____

Part E)

The partial income statement is as follows:

Axiom Mobile Plus Company
Partial Income Statement
Sales Revenue		5,750,000
Less :
Cost of Goods Available for Sale [(1,545,000 + 3,000*(12.50 + 9 + 18 + 2.75 + 11.50)]	1,706,250
Direct Labor	687,500
Overhead Cost	2,062,500	4,456,250
Gross Profit		$1,293,750