Learning Objective 2 c. Use the information provided to construct a budgeted gross profit report by product line for the year ended December 31, 20Y2. Include the gross profit as a percent of sales in the last line of your report, rounded to one decimal place. Revenues Product Costs Direct materials Direct labor Factory overhead Total Product Costs Gross profit (loss) Gross profit percentage of sales Feedback Isaac Engines Inc. Product Line Budgeted Gross Profit Reports For the Year Ended December 31, 20Y2 Pistons Valves Check My Work $ $ $ 240,000 ✔ $ 54,000 36,000 ✔ 50,400 ✔ 140,400 ✔ $ 99,600 ✔ $ 66 X % $ 273,000 65,000 ✔ 130,000 182,000 ✔ 377,000 << -104,000 -38 X % $ $ $ Cams 55,000 20,000 2,000 2,800 24,800 30,200 55 X %
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
![Learning Objective 2
Product Costs and Product Profitability Reports, using a Single Plantwide Factory Overhead Rate
Isaac Engines Inc. produces three products-pistons, valves, and cams-for the heavy equipment
industry. Isaac Engines has a very simple production process and product line and uses a single
plantwide factory overhead rate to allocate overhead to the three products. The factory overhead
rate is based on direct labor hours. Information about the three products for 20Y2 is as follows:
Pistons
Valves
Cams
Budgeted
Volume
(Units)
6,000
13,000
1,000
Pistons
Direct Labor
Hours Per Unit
Valves
Cams
If required, round all per unit answers to the nearest cent.
a. Determine the plantwide factory overhead rate.
$
28 ✔per dlh
0.30
0.50
0.10
0.3 ✔ dlh
The estimated direct labor rate is $20 per direct labor hour. Beginning and ending inventories are
negligible and are, thus, assumed to be zero. The budgeted factory overhead for Isaac Engines is
$235,200.
0.5 dlh
0.1 ✓dlh
Price Per
Unit
b. Determine the factory overhead and direct labor cost per unit for each product.
Direct Labor
Factory Overhead
Cost Per Unit
Hours Per Unit
$
$
$40
21
55
8.40 ✔
14
Direct Materials
Per Unit
2.80
$
$9
$
$
5
20
Direct Labor
Cost Per Unit
6
10
2](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2848ae22-53f7-472d-9cf5-b927a11da997%2Ff7e9c56c-1502-4e9c-abe0-7a2d3dcf651b%2Fn5yqw6_processed.jpeg&w=3840&q=75)
![●
Learning Objective 2
c. Use the information provided to construct a budgeted gross profit report by product line for the
year ended December 31, 20Y2. Include the gross profit as a percent of sales in the last line of your
report, rounded to one decimal place.
Revenues
Product Costs
Direct materials
Direct labor
Factory overhead
Total Product Costs
Isaac Engines Inc.
Product Line Budgeted Gross Profit Reports
For the Year Ended December 31, 20Y2
Pistons
Valves
Gross profit (loss)
Gross profit percentage of sales
Feedback
$
$
240,000 ✔
54,000 ✔
36,000✔
50,400 ✔
99,600 ✔
$
140,400 ✔ $
66 X %
$
$
273,000
65,000 ✓✔
130,000 ✔
182,000
377,000
-104,000
>
-38 X %
$
$
Cams
55,000
20,000
2,000
2,800
24,800
30,200
<
55 X %
Check My Work
c. Construct your report for each product as: Revenues - Direct Materials - Direct Labor - Factory
Overhead Gross Profit
Revenues Price x Unit Volume
Direct Materials = Direct Material Cost per Unit x Unit Volume
Direct Labor = Direct Labor Cost per Unit from Req. (b) x Unit Volume
Factory Overhead = Factory Overhead Cost per Unit from Req. (b) x Unit Volume
Gross Profit Percentage of Sales = Gross Profit + Sales](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2848ae22-53f7-472d-9cf5-b927a11da997%2Ff7e9c56c-1502-4e9c-abe0-7a2d3dcf651b%2Fh1ox0vs_processed.jpeg&w=3840&q=75)
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