12-36 Comprehensive budgeting problem; activity-based costing, operating and fin
ID: 2566229 • Letter: 1
Question
12-36 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 Wood $5.25 per yard $7.50 per board foot $15 per direct manufacturing labor-hour Direct manufacturing labor Input Quantities per Unit of Output (per pair of sandals) Regular Deluxe Direct materials Cloth 1.3 yards1.5 yards Wood 2 b.f Direct manufacturing labor-hours (DMLH) 5 hours 7 hours 3 hours Setup-hours per batch 2 hoursExplanation / Answer
Req 1 Revenue Budget REGULAR DELUXE Total Expected Sales in Units 2000 3000 5000 Selling price 120 195 Budgeted Sales revenue in $ 240000 585000 825000 Req 2: Production budget in units REGULAR DELUXE Expected Sales in Units 2000 3000 Add: Desired Closing inventory 400 600 Less: beginning Inventory in units 250 650 Budgeted productionin units 2150 2950 Req 3: Direct Material Usage Requirement in Units and $ CLOTH: REGULAR DELUXE Total Budgeted production in units 2150 2950 Cloth requirement per unit in yards 1.3 1.5 Total Usage in yards 2795 4425 7220 Price per yard 5.25 5.25 5.25 Budgeted Usage of Cloth in $ 14673.75 23231.25 37905 WOOD REGULAR DELUXE Total Budgeted production in units 2150 2950 Wood Requirement per unit in BF 0 2 Total Usage in BF 0 5900 5900 Price per BF 7.5 7.5 7.5 Budgeted Usage of wood in $ 0 44250 44250 Direct material Purchase in Units CLOTH WOOD Budgeted Usage 7220 5900 Add: Desired Ending inventory 386 295 Less: Beginning inventory 610 800 Budgeted Purchase in units 6996 yards 5395 bf Direct material purchase in $ CLOTH WOOD Budgeted Usage in $ 37905 44250 Add: Desired Closing inventory Cloth (386 yards@5.25) 2026.5 Wood(295 bf @7.50) 2212.5 Les: Opening Inventory 3219 6060 Budgeted Purchases in $ 36712.5 40402.5 req 4: Direct manufacturing labour cost budget REGULAR DELUXE Total Budgeted Production in Units 2150 2950 Labour hour required per unit 5 7 Budgeted Labour hours required 10750 20650 31400 Labour cost per hour 15 15 15 Budgeted labour cost per hour 161250 309750 471000
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