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Business
Accounting
Years Budgeted unit sales Stock at the end Total needs 2023 4000 1000 5000 Stock at the beginning 800 Required production in units 4200 2024 5000 1200 6200 1000 5200 2025 6000 1400 1200 2026 6200 7000 7400 8600 1600 1400 7200 2027 Total 8000 30,000 1800 1800 9800 31,800 1600 8200 800 31,000

Years Budgeted unit sales Stock at the end Total needs 2023 4000 1000 5000 Stock at the beginning 800 Required production in units 4200 2024 5000 1200 6200 1000 5200 2025 6000 1400 1200 2026 6200 7000 7400 8600 1600 1400 7200 2027 Total 8000 30,000 1800 1800 9800 31,800 1600 8200 800 31,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Prepare a direct labor budget for each of the upcoming five years.

Cost labor per unit = $8

 

 

Total direct labor hours needed for a period = Number of units to be produced in that period * Direct labors hours needed per unit

Total direct labor costs needed to meet production =Total direct labor hours needed for that period * Direct labor cost per hour

### Production and Inventory Budget Forecast (2023-2027) This table provides a detailed forecast of budgeted unit sales, inventory management, and production requirements from 2023 to 2027. The data is critical for strategic planning and decision-making in operations management. #### Breakdown of Data: - **Years:** The forecast covers the years 2023 through 2027, with each column representing a specific year. - **Budgeted Unit Sales:** - 2023: 4,000 units - 2024: 5,000 units - 2025: 6,000 units - 2026: 7,000 units - 2027: 8,000 units - **Total:** 30,000 units - **Stock at the End:** This indicates the desired inventory level at the end of each year. - 2023: 1,000 units - 2024: 1,200 units - 2025: 1,400 units - 2026: 1,600 units - 2027: 1,800 units - **Total:** 1,800 units - **Total Needs:** This combines the budgeted sales and desired end-of-year stock to indicate the total units needed. - 2023: 5,000 units - 2024: 6,200 units - 2025: 7,400 units - 2026: 8,600 units - 2027: 9,800 units - **Total:** 31,800 units - **Stock at the Beginning:** Represents the starting inventory at the beginning of each year. - 2023: 800 units - 2024: 1,000 units - 2025: 1,200 units - 2026: 1,400 units - 2027: 1,600 units - **Carried into 2028:** 800 units - **Required Production in Units:** The number of units that must be produced to meet the sales forecast while managing inventory levels. - 2023: 4,200 units - 2024: 5,200 units - 2025: 6
Transcribed Image Text:### Production and Inventory Budget Forecast (2023-2027) This table provides a detailed forecast of budgeted unit sales, inventory management, and production requirements from 2023 to 2027. The data is critical for strategic planning and decision-making in operations management. #### Breakdown of Data: - **Years:** The forecast covers the years 2023 through 2027, with each column representing a specific year. - **Budgeted Unit Sales:** - 2023: 4,000 units - 2024: 5,000 units - 2025: 6,000 units - 2026: 7,000 units - 2027: 8,000 units - **Total:** 30,000 units - **Stock at the End:** This indicates the desired inventory level at the end of each year. - 2023: 1,000 units - 2024: 1,200 units - 2025: 1,400 units - 2026: 1,600 units - 2027: 1,800 units - **Total:** 1,800 units - **Total Needs:** This combines the budgeted sales and desired end-of-year stock to indicate the total units needed. - 2023: 5,000 units - 2024: 6,200 units - 2025: 7,400 units - 2026: 8,600 units - 2027: 9,800 units - **Total:** 31,800 units - **Stock at the Beginning:** Represents the starting inventory at the beginning of each year. - 2023: 800 units - 2024: 1,000 units - 2025: 1,200 units - 2026: 1,400 units - 2027: 1,600 units - **Carried into 2028:** 800 units - **Required Production in Units:** The number of units that must be produced to meet the sales forecast while managing inventory levels. - 2023: 4,200 units - 2024: 5,200 units - 2025: 6
### Financial Projection Table The following table outlines a projected financial analysis for the years 2023 through 2027, providing insight into sales volume, revenues, costs, contribution margin, fixed costs, and operating income. | **Years** | **2023** | **2024** | **2025** | **2026** | **2027** | |---------------------|----------|----------|----------|----------|----------| | **Sales Volume** | 4,000 | 5,000 | 6,000 | 7,000 | 8,000 | | **Revenues ($100)** | 400,000 | 500,000 | 600,000 | 700,000 | 800,000 | | **Variable Costs ($60)** | 240,000 | 300,000 | 360,000 | 420,000 | 480,000 | | **Contribution Margin** | $160,000 | $200,000 | $240,000 | $280,000 | $320,000 | | **Fixed Costs** | $120,000 | $0 | $0 | $0 | $0 | | **Operating Income**| $40,000 | $200,000 | $240,000 | $280,000 | $320,000 | #### Key Components 1. **Sales Volume**: Represents the number of units sold per year. It starts at 4,000 units in 2023 and increases by 1,000 units each subsequent year, reaching 8,000 units by 2027. 2. **Revenues**: Calculated based on the sales volume, with each unit priced at $100. Revenues increase parallel to the sales volume from $400,000 in 2023 to $800,000 in 2027. 3. **Variable Costs**: Assumed at $60 per unit, these costs rise proportionately with the sales volume, starting at $240,000 in 2023 and reaching $480,000 in 2027. 4. **Contribution Margin**: This is the revenue minus variable costs, indicating how much the sales contribute towards covering fixed costs and generating profit. The contribution margin increases annually from $160,000 in 2023 to $320,000 in 2027. 5. **
Transcribed Image Text:### Financial Projection Table The following table outlines a projected financial analysis for the years 2023 through 2027, providing insight into sales volume, revenues, costs, contribution margin, fixed costs, and operating income. | **Years** | **2023** | **2024** | **2025** | **2026** | **2027** | |---------------------|----------|----------|----------|----------|----------| | **Sales Volume** | 4,000 | 5,000 | 6,000 | 7,000 | 8,000 | | **Revenues ($100)** | 400,000 | 500,000 | 600,000 | 700,000 | 800,000 | | **Variable Costs ($60)** | 240,000 | 300,000 | 360,000 | 420,000 | 480,000 | | **Contribution Margin** | $160,000 | $200,000 | $240,000 | $280,000 | $320,000 | | **Fixed Costs** | $120,000 | $0 | $0 | $0 | $0 | | **Operating Income**| $40,000 | $200,000 | $240,000 | $280,000 | $320,000 | #### Key Components 1. **Sales Volume**: Represents the number of units sold per year. It starts at 4,000 units in 2023 and increases by 1,000 units each subsequent year, reaching 8,000 units by 2027. 2. **Revenues**: Calculated based on the sales volume, with each unit priced at $100. Revenues increase parallel to the sales volume from $400,000 in 2023 to $800,000 in 2027. 3. **Variable Costs**: Assumed at $60 per unit, these costs rise proportionately with the sales volume, starting at $240,000 in 2023 and reaching $480,000 in 2027. 4. **Contribution Margin**: This is the revenue minus variable costs, indicating how much the sales contribute towards covering fixed costs and generating profit. The contribution margin increases annually from $160,000 in 2023 to $320,000 in 2027. 5. **
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