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

What is the main purpose of cost centre, Explain the main purpose of cost c...

Explain the main purpose of cost centre The main purpose of cost centre is two fields. 1. Recovery of cost: costs are collected, classified into two field in respect of

Homework, 10 questions

10 questions

Working capital, State Factors determining Working Capital requirement.

State Factors determining Working Capital requirement.

Overhead analysis sheet, .1 You are the Management accountant of an industr...

.1 You are the Management accountant of an industrial concern and have been assigned the duty of preparing a cost accounting system. Initially it has been decided to prepare three

Model construction, Model Construction The success of a simulation exer...

Model Construction The success of a simulation exercise is related to the predictive quality of the underlying model, so that considerable care should be taken with model const

Queue discipline, Queue discipline 1) It refers to the manner in which ...

Queue discipline 1) It refers to the manner in which customers behave in a queue, and to the order in which they are served up. For illustration; A customer may arrive at a que

Tools of management accounting, Explain the tools of management accounting

Explain the tools of management accounting

Impact of Cost Structure., You are required to provide a report of approx 5...

You are required to provide a report of approx 500 words or less (excluding attachments and references), accompanied by relevant calculations, in MS Word, MS Excel and/or PDF forma

Definition of the mission and goals of the organization , Definition of the...

Definition of the Mission and Goals of the Organization Generally the organization has already established mission and aim statements. Though, it may be essential to redefine

Management accounting field, INTRODUCTION AND RATIONALE The purpose of...

INTRODUCTION AND RATIONALE The purpose of this assignment is to help students further develop a number of the skills and knowledge required and valued by the accountancy profe

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