budget costing, Archie Ltd manufactures a product called Gizmo. It uses the following, Managerial Accounting

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?

Write Your Message!

Name

Email id

Message

Verfication Code

User Account

All Pages

budget costing, Managerial Accounting

Related Discussions:- budget costing

COST ACCOUNTING, WHAT IS PRIME COST?

Manegerial Accounting 4th edition Braun Tietz, Capital Project comparing hy...

What are the main limitations of breakeven charts, QUESTION 1: Part A ...

Responsibility accounting, Responsibility Accounting This is a term use...

What are the disadvantages of zero base budgeting, Disadvantages of zero ba...

Definition of cost reduction, Definition of Cost reduction Cost reducti...

Explain the external factors of pricing decisions, Explain the External fac...

Duffy tol and stamping, What are the objectives of excellence teams and min...

Capital investment appraisal, analyse the methods of capital investment app...

Decision making process, full explaination with diagram

Write Your Message!

Featured Services

Online Tutoring

Project Development

Exam Preparation

Course Help

Assignment Help

Popular Subjects

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT