Comprehensive budgeting problem; activity-based costing, operating and financial budgets. Tyva makes a very popular undyed cloth sandal in one style, but in Regular and Deluxe. The Regular sandals have cloth soles and the Deluxe sandals have cloth-covered wooden soles. Tyva is preparing its budget for June 2013 and has estimated sales based on past experience.
Other information for the month of June follows:
Input Prices Direct materials
Cloth $5.25 per yard
Wood 57.50 per board foot
Direct manufacturing labor 515 per direct manufacturing labor-hour
Input Quantities per Unit of Output (per pair of sandals)
|
|
Regular
|
Deluxe
|
|
Direct materials
|
|
|
|
Cloth
|
1.3 yards
|
1.5 yards
|
|
Wood
|
0
|
2 b.f.
|
|
Direct manufacturing labor-hours (DMLH)
|
5 hours
|
7 hours
|
|
Setup-hours per batch
|
2 hours
|
3 hours
|
Inventory Information, Direct Materials
|
|
Cloth
|
Wood
|
|
Beginning inventory
|
610 yards
|
800 b.f.
|
|
Target ending inventory
|
386 yards
|
295 b.f.
|
|
Cost of beginning inventory
|
$3,219
|
$6,060
|
Tyva accounts for direct materials using FIFO cost flow assumption.
Sales and Inventory Information, Finished Goods
|
|
Regular
|
Deluxe
|
|
Expected sales in units (pairs of sandals)
|
2,000
|
3,000
|
|
Selling price
|
$120
|
$195
|
|
Target ending inventory in units
|
400
|
600
|
|
Beginning inventory in units
|
250
|
650
|
|
Beginning inventory in dollars
|
$23,250
|
$92,625
|
Tvya uses FIFO cost flow assumption for finished goods inventory.
All the sandals are made in batches of 50 pairs of sandals. Tvya incurs manufacturing overhead costs, marketing and general administration, and shipping costs. Besides materials and labor, manufacturing costs include setup, processing and inspection costs. Tvya ships 40 pairs of sandals per shipment. Tvya activity-based costing and has classified all overhead costs for the month of June as shown in the following chart:
|
Cost Type
|
Denominator Activity
|
Rate
|
|
Manufacturing
|
|
|
|
Setup
|
Setup-hours
|
$18 per setup
|
|
Processing
|
Direct manufacturing labor hours
|
$1.80 per DMLH
|
|
Inspection
|
Number of pairs of sandals
|
$1.35 per pair
|
|
Nonmanufacturing
|
|
|
|
Marketing and general administration
|
Sales revenue
|
8%
|
|
Shipping
|
Number of shipments
|
$15 per shipment
|
Required:
1. Prepare each of the following for June:
a. Revenue budget
b. Production budget in units
c. Direct material usage budget and direct material purchases budget in both units and dollar; round to dollars.
d. Direct manufacturing labor cost budget
e. Manufacturing overhead cost budgets for processing and setup activities
f. Budget unit cost of ending finished goods inventory and ending inventories budget
g. Cost of goods sold budget
h. Market and general administration costs budget