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badbug makes Viral Memes which sell for $1,000 each. The production process is fairly simple and involves tweaking components purchased from various suppliers. Since each Viral Meme only takes one hour to assemble, there is essentially no work-in-process inventory.

Badbug has the capacity to make 2,000 Viral Memes per year.

Costs for the Viral Meme components are:

	Primary GIF		$100
	Secondary GIF		20
	JPEGs		10

Each meme should take one hour of direct labor to tweak. Direct labor wages are $150 per hour.

Other manufacturing costs on a monthly basis are:

	Factory Rent	$1,000
	Factory Insurance	5,000
	Factory Utilities	200
	Factory Miscellaneous	300

Inventory balances are as follows (Badbug uses the FIFO inventory cost flow assumption):

			Units	Dollars
	Primary GIFs	1/1/2020	300	$30,000
		12/31/2020	290		< Budgeted
	Secondary GIFs	1/1/2020	600	$12,000
		12/31/2020	580		< Budgeted
	JPEGs	1/1/2020	900	$9,000
		12/31/2020	870		< Budgeted
	Finished Viral Memes	1/1/2020	300	$107,400
		12/31/2020	290		< Budgeted

During 2020 (the entire year) Badbug expects to sell 1,000 viral memes.

• What is the budgeted cost of Viral Memes manufactured for 2020?

• What is the budgeted cost of Primary GIFs purchased for 2020?

• What is the budgeted cost of Secondary GIFs purchased for 2020?

• What is the budgeted cost of JPEGs purchased for 2020?

• What is budgeted dollar value of ending Viral Meme inventory?

• What is the budgeted dollar value of ending Primary GIF inventory?

• What is the budgeted dollar value of ending Secondary GIF inventory?

• What is the budgeted dollar value of ending JPEG inventory?

• How much income does Badbug expect to make if they sell 1,000 Viral Memes in 2020 and have budgeted Selling & Administrative expenses of $600,000 (assume no income taxes)?

• How much income does Badbug expect to make if they sell 900 Viral Memes in 2020 (production is adjusted appropriately)? Remember individual cost-to-make will change with changes in volume. That will change ending inventory value.

• How much income does Badbug expect to make if they sell 1,100 Viral Memes in 2020 (production is adjusted appropriately)?

• How much income does Badbug expect to make if they sell 2,000 Viral Memes in 2020 (production is adjusted appropriately)?

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