The board of directors of North American Manufacturing Company recently approved
ID: 2491497 • Letter: T
Question
The board of directors of North American Manufacturing Company recently approved the company’s budget and production plan for its coming fiscal year, 20X5. Budgeted units of production equal budgeted unit sales for the company’s single product. Using the information below, included in the budget and production plan:
Compute the amount of required sales – number of units and dollars – necessary to achieve the company’s budgeted net income for its fiscal year ended (FYE) December 31, 20X5
Prepare the company’s budgeted income statement for its FYE December 31, 20X5 using the Variable Costing Method (Contribution Margin Format).
Show all computations in good form and label properly all amounts presented.
Budgeted amounts:
Budgeted amounts:
Per unit
Sales units
?
Product selling price (SP)
$210.00
Sales dollars
?
Variable manufacturing costs:
Fixed costs:
Direct materials (DM)
$47.25
Manufacturing overhead (MOH) costs
$2,100,000
Direct labor (DL)
$39.75
Selling and administrative (S&A) costs
$2,250,000
Manufacturing overhead (MOH) costs
$55.50
Research and development (R&D) costs
$1,500,000
Variable selling and admin. (S&A) costs
$22.50
Net income
$1,890,000
Estimated combined effective tax rate
40.0% (i.e., 0.40)
Amount of required sales – number of units and dollars – necessary to achieve the company’s budgeted net income for its fiscal year ended (FYE) December 31, 20X5:
Prepare the company’s budgeted income statement for its FYE December 31, 20X5 using the Variable Costing Method (Contribution Margin Format)
North American Manufacturing Company
Budgeted Income Statement
Fiscal year ended December 31, 20X5
Units:
Per unit:
Total:
Sales
$
$
Variable expenses:
Cost of goods sold
$
$
Total variable expenses
$
$
$
Budgeted amounts:
Budgeted amounts:
Per unit
Sales units
?
Product selling price (SP)
$210.00
Sales dollars
?
Variable manufacturing costs:
Fixed costs:
Direct materials (DM)
$47.25
Manufacturing overhead (MOH) costs
$2,100,000
Direct labor (DL)
$39.75
Selling and administrative (S&A) costs
$2,250,000
Manufacturing overhead (MOH) costs
$55.50
Research and development (R&D) costs
$1,500,000
Variable selling and admin. (S&A) costs
$22.50
Net income
$1,890,000
Estimated combined effective tax rate
40.0% (i.e., 0.40)
Explanation / Answer
(a)
Schedule of sales dollars and sales unit:
Working:
(b)
Rounding off difference may be occured.
Net Income a 1,890,000 Add: Tax @40% b=a*40/60 1,260,000 Erarning before tax c=a+b 3,150,000 Fixed expenses: Manufacturing overhead d 2,100,000 Selling and administration overhead e 2,250,000 Research and development f 1,500,000 Total fixed cost g=d+e+f 5,850,000 Contribution margin h=c+g 9,000,000 Contribution margin ratio i 21% Sales Dollars j=h/i 42,857,143 Selling price k 210 Sales unit l=j/k 204,082Related Questions
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