Animal Gear 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 |
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Input Prices | ||||||
Direct materials | ||||||
Plastic | $4 | per pound | ||||
Metal | $3 | per pound | ||||
Direct manufacturing labor | $14 | per direct manufacturing labor hour | ||||
Input Quantities per Unit of Output | ||||||
Cat-allac | Dog-eriffic | |||||
Direct materials | ||||||
Plastic | 3 | pounds | 5 | pounds | ||
Metal | 0.5 | pounds | 1 | pound | ||
Direct manufacturing labor-hours (DMLH) | 3 | hours | 5 | hours | ||
Machine-hours (MH) | 13 | MH | 20 | MH | ||
Inventory Information, Direct Materials |
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Plastic | Metal | |||||
Beginning inventory | 230 | pounds | 80 | pounds | ||
Target ending inventory | 410 | pounds | 70 | pounds | ||
Cost of beginning inventory | $920 | $256 | ||||
Animal Gear accounts for direct materials using a FIFO cost-flow assumption |
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Sales and Inventory Information, Finished Goods | ||||||
Cat-allac | Dog-eriffic | |||||
Expected sales in units | 580 | 215 | ||||
Selling price | $190 | $260 | ||||
Target ending inventory in units | 45 | 25 | ||||
Beginning inventory in units | 25 | 40 | ||||
Beginning inventory in dollars | $2,500 | $7,440 | ||||
Animal Gear uses a FIFO cost-flow assumption for finished-goods inventory. |
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Animal Gear uses an activity-based costing system and classifies overhead into three activity pools: Setup, Processing, and Inspection. Activity rates for these activities are |
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$130 | per setup-hour, | $5 |
per machine-hour, and |
$20 | ||
per inspection-hour, respectively. Other information follows: |
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Cost Driver Information | ||||||
Cat-allac | Dog-errific | |||||
Number of units per batch | 25 | 10 | ||||
Setup time per batch | 1.25 | hours | 2 | hours | ||
Inspection time per batch | 0.5 | hours | 0.6 | hour | ||
If necessary, round up to calculate number of batches. |
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Nonmanufacturing fixed costs for March equal |
$38,000 |
half of which are salaries. Salaries are expected to increase |
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5% | in April. Other nonmanufacturing fixed costs will remain the same. The only | |||||
variable nonmanufacturing cost is sales commission, equal to |
1% |
of sales revenue. |
Prepare the following for April:
1. |
Revenues budget |
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2. |
Production budget in units |
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3. |
Direct material usage budget and direct material purchases budget |
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4. |
Direct manufacturing labor cost budget |
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5. |
Manufacturing overhead cost budgets for each of the three activities |
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6. |
Budgeted unit cost of ending finished goods inventory and ending inventories budget |
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7. |
Cost of goods sold budget |
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8. |
Nonmanufacturing costs budget |
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9. |
Budgeted income statement (ignore income taxes) |
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10. |
How does preparing the budget help
Animal Gear's management team better manage the company? |
Cost Budget | |||||||||
Available from beginning direct materials inventory |
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(under a FIFO cost-flow assumption) |
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Plastic | $920 | ||||||||
Metal | $256 | ||||||||
To be purchased this period |
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Plastic | ???? | ||||||||
Metal | ???? | ||||||||
Direct materials to be used this period | ???? | ????? | ???? | ||||||
Now prepare the direct material purchases budget. |
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Direct Materials Purchases Budget | |||||||||
For the Month of April | |||||||||
Materials | |||||||||
Plastic | Metal | Total | |||||||
Physical Units Budget | |||||||||
To be used in production | 2,800 | lbs. | 500 | lbs. | |||||
Add target ending inventory | 410 | lbs. | 70 | lbs. | |||||
Total requirement | 3,210 | lbs. | 570 | lbs. | |||||
Deduct beginning inventory | 230 | lbs. | 80 | lbs. | |||||
Purchases to be made | 2,980 | lbs. | 490 | lbs. | |||||
Cost Budget | |||||||||
Purchases | ???? | ???? | $13,390 | ||||||
Requirement 4. Prepare the direct manufacturing labor cost budget. |
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Direct Manufacturing Labor Costs Budget | |||||||||
For the Month of April | |||||||||
Output units | DMLH | Total | Hourly | ||||||
produced | per unit | hours | wage rate | Total | |||||
Cat-allac | 600 | 3 | 1,800 | $14 | $25,200 | ||||
Dog-eriffic | 200 | 5 | 1,000 | 14 | 14,000 | ||||
Total | $39,200 | ||||||||
Requirement 5. Prepare the manufacturing overhead cost budgets for each of the three activities. |
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Begin the manufacturing overhead cost budgets for each of the three activities by first calculating the total setup time. |
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Cat-allac | Dog-errific | Total | |||||||
Units to be produced | 600 | 200 | |||||||
Units per batch | / | 25 | / | 10 | |||||
Number of batches | 24 | 20 | |||||||
Setup time per batch | x | 1.25 | hrs. | x | 2 | hrs. | |||
Total setup time | 30 | hrs. | 40 | hrs. | 70 | hrs. |
As per HomeworkLib answer policy i have to answer only first 4 sub parts of this question
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