Question

Animal Transport Company makes two pet carriers, the Cat-allac and the Dog-eriffic. They are both made of plastic with metal doors, but the Cat-allac is smaller. Information for the two products for the month of April is given in the following tables: (Click the icon to view the information for the two products.) Animal Transport accounts for direct materials using a FIFO cost-flow assumption. 2(Click the icon to view the account information.) Animal Transport uses an activity-based costing system and classifies overhead into three activity pools: Setup, Processing, and Inspection. Activity rates for these activities are $120 per setup-hour, $10 per machine-hour, and $10 per inspection-hour, respectively. Other information follows: 3(Click the icon to view the other information.) Read the requirements Requirement 1. Prepare the revenues budget. Revenues Budget For the Month of April Units Selling price Total revenues Cat-allac 460 $ 210 Dog-eriffic 255 300 Total Requirement 2. Prepare the production budget in units. Production Budget (in Units) For the Month of April Cat-allac Dog-eriffic Budgeted units sales 40 20 Add target ending finished goods inventory Total required units Deduct beginning finished goods inventory 20 35 Units of finished goods to be produced Requirement 3. Prepare the direct material usage budget and direct material purchases budget. Begin with the physical units portion, then prepare the cost budget portion of the direct material usage budget. Direct Material Usage Budget in Quantity and Dollars For the Month of April Material Plastic Metal Total Physical Units Budget Direct materials required for Cat-allac lbs. lbs. Dog-errific lbs. lbs. Total quantity of direct material to be used lbs. Ibs.

Answer 1

1		Revenues budget
		Units	Selling price	Total revenues
		a	b	a*b
	Cat-allac	460	210	96600
	Dog-eriffic	255	300	76500
	Total			173100
2			Production budget in units
					Cat-allac	Dog-eriffic
	Budgeted unit sales				460	255
	Add: Target ending finished goods inventory				40	20
	Total required units				500	275
	Deduct: Beginning finished goods inventory				20	35
	Units to be produced				480	240
3			Direct material usage budget
					Plastic	Metal
	Cat-allac:
	Units to be produced			480
	Materials required per unit (in pounds)				5	0.5
	Direct materials required			a	2400	240
					(480*5)	(480*0.5)
	Dog-eriffic:
	Units to be produced			240
	Materials required per unit (in pounds)				7	1
	Direct materials required			b	1680	240
					(240*7)	(240*1)
	Total quantity of direct materials to be used
	(a+b)				4080	480
	Cost budget:
	Available from beginning direct materials inventory
	(under a FIFO cost-flow assumption)
	Plastic				230
	Metal					60
	To be purchased this period:
	Plastic			(4080-230)	3850
	Metal			(480-60)		420
	Direct materials to be used this period				4080	480
			Direct material purchases budget
					Materials	Total
					Plastic	Metal
	Physical units budget:
	To be used in production				4080	480
	Add: target ending inventory				410	55
					4490	535
	Deduct: beginning inventory				230	60
	Purchases to be made			a	4720	595
	Cost budget:
	cost per pound			b	6	5
	Purchases			a*b	28320	2975	31295

4 Direct manufacturing labor cost budget Output Hourly units DMLH wage produced per unit Total hours rate Total a b C=a*b d c*d Cat-allac 480 3 1440 12 17280 Dog-eriffic 240 5 1200 12 14400 Total 31680