Question

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

- Model 1

- 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) Budgeto Direct Labor Budget
o An overhead Budget
o Selling and Administrative Budget

- Prepare a budgeted income statement