User Account

All Pages

budget costing, Managerial Accounting

Assignment Help:
Archie Ltd manufactures a product called Gizmo. It uses the following direct inputs:
Price Quantity Cost per unit of output
Direct materials $4 per gram 10 grams per unit $40 per unit
Direct manufacturing labour-hours (DMLH) $15 per DMLH 2 DMLH per unit $30 per unit


Archie Ltd has no direct materials inventory. All manufacturing overhead costs are variable costs.

The manufacturing overhead cost is comprised of two activities: set-up and operations. The cost driver for set-up is set-up hours and the cost driver for operations is direct manufacturing labour-hours. Archie Ltd allocates set-up cost at a rate of $80 per set-up hour and each set-up takes two hours.

The company makes Gizmos in batches of 100 units. Operations costs are allocated at a rate of $1.60 per direct manufacturing labour-hour.

Required:

a. Archie Ltd plans to make and sell 20 000 Gizmos in the first quarter of next year. The selling price for the product is $120.Prepare the revenue budget for the first quarter.
b. Prepare the direct material usage budget for the first quarter of next year.
c. Prepare the direct manufacturing labour usage budget for the first quarter of next year.
d. Prepare the manufacturing overhead cost budget for each activity for the first quarter of next year.
e. Compute the budgeted unit cost of a gizmo for the first quarter of next year.
f. Prepare the cost of goods sold budget for the first quarter of next year. Assume Archie Ltd budgets 1000 units of beginning finished goods inventory at a cost of $72 per unit. The company uses the FIFO cost flow assumption for finished goods inventory. It expects to sell all 20 000 Gizmos made in the first quarter.
g. Calculate the budgeted gross margin for the first quarter of next year.
h. The company’s managers want to implement Kaizen Costing. They budget a 1% decrease in materials quantity and direct manufacturing labour-hours and a 3% decrease in set-up time per unit for each subsequent quarter. Calculate the budgeted unit cost and gross margin for quarters two and three. Assume no change in the budgeted output.
i. Refer to the above requirement. How could the reduction in materials and time be accomplished? Are there any problems with this plan?

Related Discussions:- budget costing

Example of credit standards, The current sales of M/s ABC are Rs.100 lakhs....

The current sales of M/s ABC are Rs.100 lakhs. Through relaxing the credit standards the firm can produce additional sales of Rs.15 lakhs on that bad debt losses would be 10 percen

Innovations of management accounting and control, Implementing management a...

Implementing management accounting and control innovations are often problematic. Provide a brief commentary around the key factors necessary to give such innovations the best chan

What is standard costing, What is Standard costing Standard cost is a p...

What is Standard costing Standard cost is a predetermined cost. It is a determination in advance of production of what should be the cost. When standard costs are used for the

Jit purchasing arrangements-jit benefits, JIT purchasing arrangements J...

JIT purchasing arrangements JIT philosophy also extends to adapting JIT purchasing techniques whereby delivery of material immediately precedes their use. By arranging with sup

Explain ranking of decision packages - zero base budgeting, Explain Ranking...

Explain Ranking of decision packages - zero base budgeting Ranking of decision packages: by ranking the decision packages a company will be able to weed out a lot of marginal e

Case study, Susan works in a real estate office that is equipped with up-to...

Susan works in a real estate office that is equipped with up-to-date copiers, scanners, and printers. She is frequently the only employee working in the office in the evenings and

Cost estimation, engineering method of cost estimation

engineering method of cost estimation

Accounting concepts, implications of applying accounting concepts wrongly

implications of applying accounting concepts wrongly

Exercises and Problems, Exercises 2-1, 2-2, 2-3, 2-4 Problem 2-14 I didn’t...

Exercises 2-1, 2-2, 2-3, 2-4 Problem 2-14 I didn’t write every question down out of the book just questions 2-1, and 2-2. Exercise 2-1 classifying manufacturing cost. Your boat,

Return on investment-residual income, Return on Investment and Residual Inc...

Return on Investment and Residual Income This is a traditional approach to performance measurement given by: ROI =     Income          Invested Capital               (m

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd