SC6032 I SEE THE LIGHT SC6032.xls Stephanie, when you are ready

SC6032

I SEE THE LIGHT
SC6032.xls
Stephanie, when you are ready to have your work graded you will upload this file
to the same screen that the project was downloaded from:

www.cybertext.com, The
Book List, Building Blocks
of Accounting--A
Managerial Perspective,
Enter password, Upload
Your Excel File.
Keep two copies of your
spreadsheet in two separate
places in case one of Big Al's
competitors sends someone to
destroy your work or it is lost
in transmission.
You may find it easier to
work on this project if you
print a hard copy of all the
pages.
There are alternative methods
of solving problems. To
insure similar answers and to
guarantee that you are graded
L830
121119
correctly please follow the
instructions as to rounding.
NOTE:
If there are any questions
about the project e-mail
markfriedman@miami.edu or
call 305.284.6296.
Grade will be based upon
answers entered into the
shaded boxes.

or SC6032.xlsx

FAQ 01 When I upload it, the results show that I have an answer wrong, yet that answer is needed for another
question which is marked correct.
The computer is giving you part credit.
Given:
Width 10 ft
Length 12 ft
Cost per sq. ft. $6
Find

{1.1} Area ----- 100 sq ft (wrong)
{1.2} Cost ---- $600 correct based on the wrong area. Note if the area is corrected,120 sq ft, the cost would be wrong.

FIRST
LAST
number
Stephanie Campaniony
6032

File
SC6032

I SEE THE LIGHT
Background Information
I SEE THE LIGHT (ISTL) is a subchapter S corporation that
manufactures children's lamps/nightlights 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 pieces is placed. There are presently 10 different figurines that
come in six different colors; 60 models.
The lamp shades and the electrical parts are supplied from domestic
manufacturers. 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:
Part 1
Fixed and Variable Cost Determinations - Unit Cost
Calculations
Part 2
Cost Volume Relationships - Profit Planning
Part 3
Budgets
Part 4
Process Costing
Part 5
Job Order Costing
Part 6
Standard Costing - Variance Analysis
Part 7
Capital Decision Making
To upload your work to Big Al the file without changing the name.
Pay attention to the specific location that Excel saves the file. Return
to the bottom of the page that you downloaded the file from;
Cybertext.com, The Book List, Building Blocks of Accounting--A
Managerial Perspective, Enter password, Upload Your Excel File. If
you upload an old version of the file the results will not update.
Keep two copies of your spreadsheet in two separate places in case one
of Big Al's competitors sends someone to destroy your work or it is
lost in transmission.
You may find it easier to work on this project if you print a hard copy
of all the pages.
NOTE:
If there are any questions about the project e-mail
markfriedman@miami.edu or call 305.284.6296.
Grade will be based upon answers entered into the shaded boxes.

Page 2

I See The Light
Projected Income Statement
For the Period Ending December 31, 20x1

Sales
25,000 lamps @ $45.00
Cost of Goods Sold
@ $28.93
Gross Profit
Selling Expenses:
Fixed
Variable
(Commission per unit) @ $3.15
Administrative Expenses
Total Selling and Administrative Expenses:
Net Profit

$1,125,000.00
723,250.00
$401,750.00
$23,000.00
78,750.00

$101,750.00
40,500.00
142,250.00
$259,500.00

I See The Light
Projected Balance Sheet
As of December 31, 20x1
Current Assets
Cash
Accounts Receivable
Inventory
Raw Material
Figurines
Electrical Sets
Work in Process
Finished Goods
Total Current Assets
Fixed Assets
Equipment
Accumulated Depreciation
Total Fixed Assets
Total Assets
Current Liabilities
Accounts Payable
Total Liabilities
Stockholder's Equity
Common Stock
Retained Earnings
Total Stockholder's Equity
Total Liabilities and Stockholder's Equity

$34,710.00
67,500.00
500 @ $9.20
500 @ $1.25
0
3000 @ $28.9250

4,600.00
625.00
86,775.00
$194,210.00
$20,000.00
6,800.00
13,200.00
$207,410.00

$54,000.00
$54,000.00
$12,000.00
141,410.00
153,410.00
$207,410.00

Page 3

Stephanie Campaniony
6404

PART 1
Fixed and Variable Cost Determinations
Unit Cost Calculations

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:
Figurines
Electrical Sets
Lamp Shade
Direct Labor:
Variable Overhead:
Fixed Overhead:
Cost per lamp:

$9.2000000
1.2500000
6.0000000
2.2500000
0.2250000
10.0000000

per lamp
per lamp
per lamp
per lamp (4 lamps/hr.)
per lamp
per lamp (based on normal capacity of 25,000 lamps)

$28.9250000 per lamp

Expected increases for 20x2
When calculating projected increases round to SEVEN decimal places,$0.0000000.
1. Material Costs are expected to increase by 2.00% .
2. Labor Costs are expected to increase by 5.00%.
3. Variable Overhead is expected to increase by 4.00%.
4. Fixed Overhead is expected to increase to $285,000.
5. Fixed selling expenses are expected to be $35,000 in 20x2.
6. Variable selling expenses (measured on a per lamp basis) are expected to increase
by 6.00%.
7.

Fixed Administrative expenses are expected to increase by $10,000.
The total variable administrative expenses for 20x0 were $40,320.00, when
22,000 units were sold. Use the High-Low method to calculate
the total fixed administrative expense.

8. Variable administrative expenses (measured on a per lamp basis) are expected to
increase by 2.00%. The total administrative expenses for 20x0 were
$40,320.00, when 22,000 units were sold. Use the High-Low method to calculate
the variable administrative expense per lamp.
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.

Page 4

Stephanie Campaniony
6404
I See The Light, Inc
Schedule of Projected Costs

Variable Manufacturing Unit Cost
20x1 Cost

Projected
Percent
Increase

Figurines
Electrical Sets
Lamp Shade
Labor
Variable Overhead

20x2 Cost Rounded to 7
Decimal Places
$9.3840000
$1.2750000
$6.1200000
$2.3625000
$0.2340000

7
7
7
7

$19.3755000

{4.06}

7

44,750.0000000

{4.07}
{4.08}
{4.09}

7
7
7

5.1300000

Projected Variable Manufacturing Cost Per Unit

{4.01}
{4.02}
{4.03}
{4.04}
{4.05}

7

{4.06}
{4.10}

7

20x2 Cost Rounded to
2 Decimal Places
$285,000.00

{4.11}

2

{4.12}
{4.13}
{4.14}
{4.15}

2
7
2
2

Total Variable Cost Per Unit
20x1 Cost

Variable Selling
Variable Administrative 20x1
Variable Administrative 20x2

Projected
Percent
Increase

20x2 Cost Rounded to
7 Decimal Places
83,475.0000000

40,500.0000000

Projected Variable Manufacturing Unit Cost
Projected Total Variable Cost Per Unit

Schedule of Fixed Costs
20x1 Cost
Fixed Overhead
(normal capacity of _________ lamps @ __ )
Fixed Selling
Fixed Administrative 20x1
Fixed Administrative 20x2
Projected Total Fixed Costs

Projected
Increase

$35,000.00
23,000.00
$83,250.00
$403,250.00

Page 5

Stephanie Campaniony
6404

PART 2

PART 2 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. 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, $##.##) Contribution Margin Ratio (Round to four places,% is two of those places ##.##%) For 20x2 the selling price per lamp will be $45.00. The desired net income in 20x2 is $200,000 . What would sales in units have to be in 20x2 to reach the profit goal? Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed) For 20x2 the selling price per lamp will be $45.00. If the fixed cost increase by $35,000.00 how many lamps must be sold to breakeven? Breakeven sales in units (Since we cannot sell part of a unit round up to the next unit if needed)

Page 7

Stephanie Campaniony
6404

PART 3
Budgets
Division N has decided to develop its budget based upon projected sales of 33,000 lamps at
$54.00 per lamp.
The company has requested that you prepare a master budget for the year. This budget is to be used
for planning and control of operations and should be composed of:
1. Production Budget
2. Materials Budget
3. Direct Labor Budget
4. Factory Overhead Budget
5. Selling and Administrative Budget
6. Cost of Goods Sold Budget
7. Budgeted Income Statement
8. Cash Budget
Notes for Budgeting:
The company wants to maintain the same number of units in the beginning and ending inventories of
work-in-process, and electrical parts while increasing the figurines inventory to 675 pieces and
increasing the finished goods by 26.00% .
Complete the following budgets
1 Production Budget
Planned Sales
Desired Ending Inventory of Finished Goods (roundup to the next unit)
Total Needed
Less: Beginning Inventory
Total Production

35,605 units

{7.01}

0

Page 8

Stephanie Campaniony
6404

2 Materials Budget
Figurines
Needed for Production
Desired Ending Inventory
Total Needed
Less: Beginning Inventory
Total Purchases
Cost per piece
Cost of Purchases (Round to two places, $##.##)

{8.01}
{8.02}

0
0

{8.03}
{8.04}

0
0

{8.05}

2

{8.06}

0

{8.07}

2

{8.08}

2

{8.09}

2

{8.10}

2

Total Factory Overhead (Round to two places, $##.##)

{8.11}

2

Predetermined Factory Overhead Rate based upon the budgeted
number of units to be produced (Round to seven places, $##.#######)

{8.12}

7

Electrical Parts
Needed for Production
Desired Ending Inventory
Total Needed
Less: Beginning Inventory
Total Purchases
Cost per piece
Cost of Purchases (Round to two places, $##.##)
Lamp Shades
Needed for Production
Desired Ending Inventory
Total Needed
Less: Beginning Inventory
Total Purchases
Cost per piece
Cost of Purchases (Round to two places, $##.##)

3 Direct Labor Budget
Labor Cost Per Lamp
Production
Total Labor Cost (Round to two places, $##.##)

4 Factory Overhead Budget
Variable Factory Overhead:
Variable Factory Overhead Cost Per Unit
Number of Units to be Produced
Total Variable Factory Overhead (Round to two places, $##.##)
Fixed Factory Overhead

Page 9

Stephanie Campaniony
6404

5 Selling and Admin. Budget
Fixed Selling
Variable Selling (Round to two places, $##.##)
Fixed Administrative
Variable Administrative (Round to two places, $##.##)
Total Selling and Administrative (Round to two places, $##.##)

6

{9.01}

2

{9.02}

7

{9.03}

2

{9.04}

2

{9.05}

2

{9.06}
{9.07}
{9.08}
{9.09}
{9.10}
{9.11}
{9.12}

2
2
2
2
2
2
2

Cost of Goods Sold Budget - Assume FIFO (First-In, First-Out) and
overhead is applied based on the number of units to be produced. Round dollars to
Cost of making one unit next year
Material cost per unit
Labor Cost Per Lamp
Factory overhead per unit

seven places,
$##.#######

Total cost of one unit
(Round to seven places, $##.#######)
Round dollars to
two places,
$##.##
Beginning Inventory, Finished Goods
Production Costs:
Materials:
Figurines:
Beginning Inventory
Purchased
Available for Use
Ending Inventory of Figurines
Figurines Used In Production
Electrical Parts
Beginning Inventory
Purchased
Available for Use
Ending Inventory of Electrical Parts
Electrical Parts Used In Production
Lamp Shades:
Lamp Shades Used In Production
Total Materials:
Labor
Overhead
Cost of Goods Available
Less: Ending Inventory, Finished Goods
Cost of Goods Sold

Page 10

Stephanie Campaniony
6404

7 Budgeted Income Statement
Sales
Cost of Goods Sold
Gross Profit
Selling Expenses & Admin. Expenses
Net Operating Income

{10.01}

2

{10.02}
{10.03}
{10.04}

2
2
2

{10.05}

2

{10.06}
{10.07}

2
2

Budgeted Cash Balance before financing
Needed Minimum Balance

{10.08}

2

Amount to be borrowed (if any)

{10.09}

2

Budgeted Cash Balance

{10.10}

2

8 Cash Budget
Assume actual cash receipts and disbursements will follow the pattern below: (Note: Receivables and
Payables of 12/31/x1 will have a cash impact in 20x2.)
1. 15.00% of sales for the year are made in November and December. Since our customers have 60 day terms
those funds will be collected be collected in January and February.
2. 80.00% of material purchases will be paid during the year, the remaining portion will be paid in Januay or February.
3. All other manufacturing and operating costs are paid for when incurred.
4. The budgeted depreciation expense is equal to 0.6% of the fixed manufacturing, selling and administrative expenses.
5. Minimum Cash Balance needed for 20x2, $170,000 .
I See The Light
Projected Cash Budget
For the Year Ending December 31, 20x2

Round dollars to
two places, $##.##
Beginning Cash Balance
Cash Inflows:
Sales Collections:
Account Receivable (Sales last year not collected)
Sales made and collected in 20x2
Cash Available
Cash Outflows:
Purchases
Accounts Payable (Purchases last year)
Purchases made and paid for in 20x2
Other Manufacturing Costs
Direct Labor
Total Manufacturing Overhead
Selling and Administrative
Less: Depreciation
Total Cash Outflows

Page 9

Stephanie Campaniony
6404

9 Variable Cost of making one unit next year - used to calculate the Ending Inventory of Finished Goods
Material cost per unit
Labor Cost Per Lamp
Variable Factory overhead per unit

20x2 Cost Rounded
to 7 Decimal Places

Total variable manufacturing cost of one unit

{11.01}

7

{11.02}

2

{11.03}

2

{11.04}

2

{11.05}
{11.06}

2
2

{11.07}

2

{11.08}
{11.09}

2
2

Operating Income, Absorption
Operating Income, Variable Costing
Excess (Absorption Costing Operating Income - Variable Costing Operating Income)

{11.10}

2

Budgeted Fixed Overhead
Budgeted Number of Units to be Produced
Budgeted Fixed Cost Per Unit (Round to 7 decimals #.#######)

{11.11}

7

Fixed Manufacturing Overhead in the Ending Inventory
Fixed Manufacturing Overhead in the Beginning Inventory
Increase (Fixed Manufacturing Overhead in the Ending Inventory-Fixed Manufacturing Overhead in the Beginning Inventory)

{11.12}
{11.13}
{11.14}

2
2
2

10 Budgeted Operating Income Using Direct Costing

20x2 Cost Rounded
to 2 Decimal Places

Sales
Variable Cost of Goods Sold - Assume FIFO (First-In, First-Out)
Beginning Inventory, Finished Goods (Variable Costing)
Production Costs:
Materials:
Figurines:
Electrical Parts
Lamp Shades:
Labor:
Variable Overhead:
Total Variable Production Costs
Cost of Goods Available For Sale
Less: Ending Inventory, Finished Goods (Variable Costing)
Variable Cost of Goods Sold
Variable Selling (Round to two places, $##.##)
Variable Administrative (Round to two places, $##.##)
Total Variable Costs
Contribution Margin
Fixed Costs:
Fixed Manufacturing Overhead
Fixed Selling
Fixed Administrative
Total Fixed
Operating Income, Variable Costing

Page 11

Stephanie Campaniony
6404

PART 4.1
Process Costing - Weighted Average
General Information
The I See The Light Company has a related company that produces the figurines. They use process costing
in the molding department. The factory overhead is applied at a rate of 50% of direct labor dollars.
The material is added at the beginning of the process. The labor and overhead costs are assumed
to be added uniformly throughout.

Month of January
Selected information for January is presented below. Note that the applied overhead rate was
50% of direct labor costs in the molding department.

Molding Department
Goods in-process as of January 1 were 3,200 figurines at a cost of $5,312.00. Of this amount, $1,856.00 was from
raw materials added, $2,304.00 for labor and $1,152.00 for overhead. These 3,200 figurines were assumed to be
40.00% complete as to labor and overhead.
During January, 25,500 units were started, $14,790.00 of materials and $43,506.00 of labor costs were incurred.

The 6,500 figurines that were in-process at the end of January were assumed to be 50.00% complete to
labor and overhead.
All figurines in January passed inspection.

Page 12

Stephanie Campaniony
6404

PART 4.1
Process Costing - Weighted Average
MOLDING
Physical Flow of Units

January

Work-in-Process - Beginning
Units Started this Period
Units to Account for
Total transferred out
Work-in-Process - Ending
Total Accounted for

{13.01}
{13.02}

0
0

Equivalent Units Material (Round to three places, ##.###.###)

{13.03}

3

Equivalent Units Conversion (Round to three places, ##.###.###)

{13.04}

3

Total cost of Material (Round to two places, ##.###.##)

{13.05}

2

Total cost of Conversion (Round to two places, ##.###.##)
Total cost to account for (Round to two places, ##.###.##)

{13.06}
{13.07}

2
2

Cost per equivalent unit of Material (Round to seven places, ###.#######)

{13.08}

7

Cost per equivalent unit of Conversion (Round to seven places, ###.#######)

{13.09}

7

Cost of the units transferred, material and convesion (Round to two places, $###,###.## )

{13.10}

2

Cost of the ending inventory, material and convesion (Round to two places, $###,###.## )

{13.11}

2

Page 11

Stephanie Campaniony
6404

PART 4.2
Process Costing - First-In First-Out
Mr. Jones, a consultant, has indicated that FIFO process costing would produce more meaningful cost data.

General Information
The I See The Light Company has a related company that produces the figurines. They use process costing
in the molding department. The factory overhead is applied at a rate of 50% of direct labor dollars.
The material is added at the beginning of the process. The labor and overhead costs are assumed
to be added uniformly throughout.

Month of January
Selected information for January is presented below. Note that the applied overhead rate was
50% of direct labor costs in the molding department.
Molding Department
Goods in-process as of January 1 were 3,200 figurines at a cost of $5,312.00. Of this amount, $1,856.00 was from
raw materials added, $2,304.00 for labor and $1,152.00 for overhead. These 3,200 figurines were assumed to be
40.00% complete as to labor and overhead.
During January, 25,500 units were started, $14,790.00 of materials and $43,506.00 of labor costs were incurred.

The 6,500 figurines that were in-process at the end of January were assumed to be 50.00% complete to
labor and overhead.
All figurines in January passed inspection.

Page 12

Stephanie Campaniony
6404

PART 4.2
Process Costing - First-In First-Out
MOLDING
Physical Flow of Units

January

Work-in-Process - Beginning
Units Started this Period
Units to Account for
Total transferred out
Work-in-Process - Ending
Total Accounted for

{15.01}

0
0

Equivalent Units Material (Round to three places, ##.###.###)

{15.02}

3

Equivalent Units Conversion (Round to three places, ##.###.###)

{15.03}

3

Total cost in the Beginning Inventory (Round to two places, ##,###.##)

{15.04}

2

Total cost of Material this period (Round to two places, ##.###.##)

{15.05}

2

Total cost of Conversion this period (Round to two places, ##.###.##)

{15.06}

2

Total cost to account for (Round to two places, ##.###.##)

{15.07}

2

Cost per equivalent unit of Material this period (Round to seven places, ###.#######)

{15.08}

7

Cost per equivalent unit of Conversion this period (Round to seven places, ###.#######)

{15.09}

7

Cost of the units transferred, material and convesion (Round to two places, $###,###.## )

{15.10}

2

Cost of the ending inventory, material and convesion (Round to two places, $###,###.## )

{15.11}

2

Page 11

Stephanie Campaniony
6404

PART 4.3
Process Costing - Weighted Average With Spoilage
Mr. Smith, a consultant, has indicated that the Weighted Average method is appropriate our needs. He is concerned
about the number of units that failed inspection and the pricing of the good units completed.

General Information
The I See The Light Company has a related company that produces the figurines. They use process costing
in the molding department. The factory overhead is applied at a rate of 50% of direct labor dollars.
The material is added at the beginning of the process. The labor and overhead costs are assumed
to be added uniformly throughout.

Month of January
Selected information for January is presented below. Note that the applied overhead rate was
50% of direct labor costs in the molding department.
Molding Department
Goods in-process as of January 1 were 3,200 figurines at a cost of $5,312.00. Of this amount, $1,856.00 was from
raw materials added, $2,304.00 for labor and $1,152.00 for overhead. These 3,200 figurines were assumed to be
40.00% complete as to labor and overhead.
During January, 25,500 units were started, $14,790.00 of materials and $43,506.00 of labor costs were incurred.

The 6,500 figurines that were in-process at the end of January were assumed to be 50.00% complete to
labor and overhead.
While normal spoilage is 5%, 2,220 units failed inspection in January. The units are inspected at the end of the process.

Page 12

Stephanie Campaniony
6404

PART 4.3
Process Costing - Weighted Average With Spoilage
MOLDING
Physical Flow of Units

January

Work-in-Process - Beginning
Units Started this Period
Units to Account for
Total transferred out
Normal spoilage (Roundup to the next unit if needed)
Abnormal spoilage
Work-in-Process - Ending
Total Accounted for

{17.01}
{17.02}
{17.03}
{17.04}
{17.05}

0
0
0
0
0

Equivalent Units Material (Round to three places, ##.###.###)

{17.06}

3

Equivalent Units Conversion (Round to three places, ##.###.###)

{17.07}

3

Total cost of Material (Round to two places, ##.###.##)

{17.08}

2

Total cost of Conversion (Round to two places, ##.###.##)
Total cost to account for (Round to two places, ##.###.##)

{17.09}
{17.10}

2
2

Cost per equivalent unit of Material (Round to seven places, ###.#######)

{17.11}

7

Cost per equivalent unit of Conversion (Round to seven places, ###.#######)

{17.12}

7

Cost of the ending inventory, material and convesion (Round to two places, $###,###.## )

{17.13}

2

Cost of the units transferred, material and convesion (Round to two places, $###,###.## )

{17.14}

2

Cost of the abnormal spoilage (Round to two places, $###,###.## )

{17.15}

2

Page 13

Stephanie Campaniony
6404

PART 5
Job Order Costing

To keep records of the actual cost of a special order job, a Job Order Cost System has been developed.
Overhead is applied at the rate of 50% of the direct labor cost.

Job Order Costing Section
On January 1, 20x2, Division S began Job 2407 for the Client, THE BIG CHILDREN STORE. The
job called for 4,000 customized lamps. The following set of transactions occurred from
January 5 until the job was completed:
5-Jan Purchased 4,150 figurines @ $9.25 per figurine.
6-Jan Purchased 4,050 sets of electical components @ $1.20 per set.
7-Jan Purchased 4,000 lamp shades @ $6.60 per set.
8-Jan 4,150 figurines were requisitioned.
9-Jan 4,025 sets of el...