PLEASE FILL OUT EMPTY CHARTS. WILL GIVE THUMBS UP.

D3 B D E F G H I K L M I SEE THE LIGHT 8 UWNVOU 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 22 Background Information I SEE THE LIGHT (ISTL) is a subchapter S corporation that manufactures children's lampsightlights for use in bedrooms. These lamps are sold nationwide through a group of independent sales representatives who have an exclusive sales region. The business is in its tenth year and has asked you to assist in planning for next year's operations. The lamps are ceramic figurines of animals, boats, boys and girls playing and singing, all in delightful colors. The owner of the business, Big Al, creates a drawing for the figurine and faxes it to a plant in China where a mold is created and a sample produced and hand painted. If the mold meets the expectations of Big Al an order of 500 lamp parts is placed. Each lamp kit consists of the parts required to complete one lamp: a figurine, a lamp shade and the required electrical components. There are presently 40 different figurines that come in six different colors, 60 models There are presently 10 workers in the plant. They are responsible for receiving the raw material, manufacturing the product, packing and shipping. In addition to Big Al there are two office workers who are responsible for all administrative duties Big Al had his accountant prepare the Projected Income Statement and Balance Sheet presented on page two Big Al heard about your skills in managerial accounting and would like your assistance in the following areas: B I See The Light Projected Income Statement For the Period Ending December 31, 20x1 $1,125,000.00 750,000.00 $ 375,000.00 Sales 25,000 lamps @ $45.00 Cost of Goods Sold @ $30.00 Gross Profit Selling Expenses: Fixed Variable (Commission per unit) @ $3.00 Administrative Expenses: Fixed Variable @ $2.00 Total Selling and Administrative Expenses: Net Profit $23,000.00 75,000.00 $ 98,000.00 $42,000.00 50,000.00 92,000.00 190,000.00 $ 185,000.00 + I See The Light Projected Balance Sheet As of December 31, 20x1 $ 34.710.00 67,500.00 Current Assets Cash Accounts Receivable Inventory Raw Material Lamp Kits Work in Process Finished Goods Total Current Assets 8,000.00 500 @ $16.00 0 3000 @ $30.00 90,000.00 $ 200,210.00 Fixed Assets Equipment Accumulated Depreciation Total Fixed Assets Total Assets $ 20,000.00 6,800.00 + 13,200.00 $ 213,410.00 $ 54,000.00 $ 54,000.00 Current Liabilities Accounts Payable Total Liabilities Stockholder's Equity Common Stock Retained Earnings Total Stockholder's Equity Total Liabilities and Stockholder's Equity $ 12,000.00 147,410.00 159,410.00 $ 213,410.00 The projected cost of a lamp is calculated based upon the projected increases or decreases to current costs. The present costs to manufacture one lamp are: Lamp Kit: Direct Labor: Variable Overhead: Fixed Overhead: $16.0000000 per lamp 2.0000000 per lamp (4 lamps/hr.) 2.0000000 per lamp 10.0000000 per lamp (based on normal capacity of 25,000 lamps) Cost per lamp: $30.0000000 per lamp Expected increases for 20x2 When calculating projected increases round to TWO ($0.00) decimal places. 1. Material Costs are expected to increase by 6.00%. 2. Labor Costs are expected to increase by 6.00%. 3. Variable Overhead is expected to increase by 3.00%. 4. Fixed Overhead is expected to increase to $280,000. 5. Fixed Administrative expenses are expected to increase to $44,000. 6. Variable selling expenses (measured on a per lamp basis) are expected to increase by 3.00% 7. Fixed selling expenses are expected to be $41,000 in 20x2. 8. Variable administrative expenses (measured a per lamp basis) are expected to increase by 2.50%. On the following schedule develop the following figures: 1- 20x2 Projected Variable Manufacturing Unit Cost of a lamp. 2- 20x2 Projected Variable Unit Cost per lamp. 3- 20x2 Projected Fixed Costs. Variable Manufacturing Unit Cost 20x1 Cost Projected Percent Increase 20x2 Cost Rounded to 2 Decimal Places Lamp Kit Labor Variable Overhead {4.01) {4.02) {4.03) Projected Variable Manufacturing Cost Per Unit {4.04) 1 Total Variable Cost Per Unit 20x1 Cost Projected Percent Increase 20x2 Cost Rounded to 2 Decimal Places + 2 13 Variable Selling 24 Variable Administrative 1 Projected Variable Manufacturing Unit Cost 12 13 14 Projected Total Variable Cost Per Unit 15 52 {4.05) {4,06) {4.04) {4.07) 52 53 54 Schedule of Fixed Costs 20x1 Cost 20x2 Cost Projected Percent Increase {4.08) lamps @) 55 56 Fixed Overhead 53 (normal capacity of 64 Fixed Selling 65 Fixed Administrative 66 67 Projected Total Fixed Costs 74 175 {4.09) {4.10) {4.11) Cost Volume Relationships - Profit Planning Big Al is about to begin work on the budget for 20x2 and they have requested that you prepare an analysis based on the following assumptions. Note: Remember, that we cannot sell part of a lamp, therefore to find the number of units you have to round up to the next complete unit. Furthuremore, to find the required sales in dollars it may be easier to find the number of units and then multiply by the selling price per unit. 1. For 20x2 the selling price per lamp will be $45.00. What is the projected contribution margin and contribution margin ratio for each lamp sold? Contribution Margin per unit (Round to two places, $####) (5.01) Contribution Margin Ratio (Round to four places,% is two of those places ##.##%) {5.02) 3 2. For 20x2 the selling price per lamp will be $45.00. The desired net income in 20x2 is $185,000. What 14 would sales in units have to be in 20x2 to reach the profit goal? 25 96 37 39 10 11 43 45 146 47 48 149 2R Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) 9 {5.03) 51 52 3. For 20x2 the selling price per lamp will be $45.00. If the fixed cost increase by $70,000.00 how many lamps 53 must be sold to breakeven? 54 55 57 58 59 60 61 63 64 65 66 67 Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit f needed) 68 69 70 71 mmmmmwwmu Eggs {5.04)