Answer Happy

Spring Manufacturing Company makes two components identified as C12 and D57. Selected budgetary data for 2022 follow: Requirements for each finished component: RM 1 RM 2 RM 3 Direct labor Product information: Sales price Sales (units) Estimated beginning inventory (units) Desired ending inventory (units) Cost per pound Estimated beginning inventory in pounds Desired ending inventory in pounds. Indirect materials-variable C12 $6 3,400 4,000 10 pounds 0 2 pounds 2 hours $ 200 12,000 Finished Components 410 300 Direct Materials Information RM1 RM2 $ 1.50 1,600 800 Factory Overhead Information €11.000 D57 RM3 $ 0.50 900 1,500 8 pounds 4 pounds | 1 pound 3 hours $ 190 10,000 The firm expects the average wage rate to be $30 per hour in 2022. Spring Manufacturing uses direct labor hours to apply overhead. Each year the firm determines the overhead application rate for the year based on budgeted direct labor hours for the year. The firm maintains negligible Work-in- Process Inventory and expects the cost per unit for both beginning and ending inventories of finished products to be identical. 100 200

Indirect materials-variable Miscellaneous supplies and tools-variable Indirect labor-variable Supervision-fixed Payroll taxes and fringe benefits-variable Maintenance costs-fixed Maintenance costs-variable Depreciation-fixed Heat, light, and power-fixed Heat, light, and power-variable Total Advertising Sales salaries Travel and entertainment Depreciation-warehouse Office salaries Executive salaries Supplies Depreciation-office Total Selling and Administrative Expense Information $ 60,000 180,000 65,000 5,300 56,000 260,000 The effective income tax rate for the company is 30%. Factory Overhead Information $ 11,000 5,500 43,000 3,600 5,500 $ 635,400 170,000 210,000 19,000 10,040 71,280 43,470 11,000 $ 594,290

The effective income tax rate for the company is 30%. Spring Manufacturing Company has had a continuous improvement (kaizen) program for the last two years. According to the kaizen program, the firm is expected to manufacture C12 and D57 with the following specifications: Cost Element Raw material 1 Raw material 2 Raw material 3. Direct labor C12 9 pounds 0 1.8 pounds 1.5 hours D57 7 pounds 3.6 pounds 0.8 pound 2.0 hours The company specifies that the variable factory overhead is to decrease by 10% while the fixed factory overhead is to decrease by 5%, except for depreciation expenses. The company does not expect the price of the raw materials to change. However, the hourly wage rate is likely to be $30. Required: Assume the firm can attain the expected operating level as prescribed by the kaizen program: I-a. Prepare the Sales budget for 2022. 1-b. Prepare the Production budget for 2022. 1-c. Prepare the Direct materials purchases budget (units and dollars) for 2022. 1-d. Prepare the Direct labor budget for 2022. 1-e. Prepare the Factory overhead budget for 2022. 1-f. Prepare the Cost of goods sold and ending finished goods inventory budgets for 2022. 1-g. Prepare the Selling and administrative expense budget for 2022.

Prepare the Budgeted income statement, the last item of which is labeled After-tax Operating Income for 2022. (Round per unit" to 5 decimal places. Do not round any other intermediate calculations. Round your answers to the nearest who dollar.) SPRING MANUFACTURING COMPANY Budget Income Statement For the Year 2022 C12 $ 0 $ D57 $ 0 $ $ $ Total 0 0 0 0 0

Prepare the Selling and administrative expense budget, broken down into two components: Selling Expenses, an Administrative Expenses for 2022. Selling expenses: SPRING MANUFACTURING COMPANY Selling and Administrative Expense Budget For the Year 2022 Administrative expenses: Total selling and administrative expenses $ $ $ 0 0 0

Sales volume Cost per unit Cost of goods sold SPRING MANUFACTURING COMPANY Ending Finished Goods Inventory and Budgeted CGS For the Year 2022 C12 Ending finished goods inventory Cost per unit Budgeted ending inventories 12,000 86.83330 $ $ $ $ 1,042,000 $ 0 $ D57 11.37760 Total 0 $ 12,000 0 $ 1,042,000 +

SPRING MANUFACTURING COMPANY Factory Overhead Budget For the Year 2022 Original variable OH costs: Indirect materials Miscellaneous supplies and tools Indirect labor Payroll taxes and fringe benefits Maintenance costs Heat, light, and power Total variable factory overhead Reduction rate for variable OH costs Budgeted variable OHI Original fixed OH: Supervision Maintenance costs Heat, light, and power $ $ 0 10 261,486

SPRING MANUFACTURING COMPANY Direct Labor Budget For the Year 2022 C12 Budgeted production Direct labor hours per unit Total direct labor hours needed Hourly wage rate Budgeted direct labor costs 1.5 0 D57 2.0 0 $ $ Total 0 30 0

SPRING MANUFACTURING COMPANY Direct Materials Purchases Budget (units and dollars) For the Year 2022 C12 Raw material (RM) 1: Budgeted production Pounds per unit RM 1 needed for production Add: Desired ending inventory (lbs.) Total RM 1 needed (lbs.) Less: Beginning inventory (lbs.) Required purchases of RM 1 (lbs.) Pounds per unit Budgeted purchases, RM 1 Raw material (RM) 2: Budgeted production + 9.0 0 D57 7.0 0 $ $ Total 0 2,900 (2,900) 2.00 (5,800)

Raw material (RM) 2: Budgeted production Pounds per unit RM 2 needed for production Add: Desired ending inventory (lbs.) Total RM 2 needed (lbs.) Less: Beginning inventory (lbs.) Required purchases of RM 2 (lbs.) Cost per pound Budgeted purchases, RM 2 Raw material (RM) 3: Budgeted production Pounds per unit ▸ RM 3 needed for production Add: Desired ending inventory (lbs.) Total RM 3 needed (lbs.) Less: Beginning inventory (lbs.) Required purchases of RM 3 (lbs.) + 0 0 0 0 $ 0 0 0 0 0 0 0

Cost per pound Budgeted purchases, RM 2 wy Raw material (RM) 3: Budgeted production Pounds per unit RM 3 needed for production Add: Desired ending inventory (lbs.) Total RM 3 needed (lbs.) Less: Beginning inventory (lbs.) Required purchases of RM 3 (lbs.) Cost per pound Budgeted purchases, RM 3 0 0 $ 0 0 0 0 0

Prepare the Sales budget for 2022. Sales (in units) Selling price per unit Total revenue SPRING MANUFACTURING COMPANY Sales Budget For the Year 2022 C12 $ 12,000 0 $ D57 0 $ Total 12,000 0

SPRING MANUFACTURING COMPANY Production Budget For the Year 2022 Budgeted sales (in units) Add: Desired finished goods ending inventory Total units needed Less: Beginning finished goods inventory Budgeted production (in units) C12 12,000 300 12,300 12,300 D57 200 200 200

Prepare the Budgeted Income statement, the last item of which is labeled After-tax Operating Income for 2022. (Round per unit" to 5 decimal places. Do not round any other intermediate calculations. Round your answers to the nearest who dollar.) SPRING MANUFACTURING COMPANY Budget Income Statement For the Year 2022 C12 $ 0 $ D57 $ 0 $ $ $ Total 0 0 0 0 0