User Account

All Pages

Bugeting, Managerial Accounting

Assignment Help:
PART 1

Carlton Ltd operates at capacity and makes glass-topped dining tables and wooden chairs which are then typically sold as sets of four chairs with one table. However, some customers purchase replacement or extra chairs and others buy some chairs or a table only, so the sales mix is not exactly 4:1. The company is planning its annual budget for the financial year 2015. The following information has been compiled for the budgetary process:

Input prices
Direct materials
Wood $6.40 per board metre
Glass $12 per sheet
Direct manufacturing labour $15 per direct manufacturing labour-hour

Input quantities per unit of output Chairs Tables
Direct materials
Wood 1.25 board metres 1.75 board metres
Glass - 2 sheets
Direct manufacturing labour 4 hours 8 hours
Machine-hours (MH) 3 MH 5MH

Inventory information, direct materials Wood Glass
Beginning inventory 27,300 board metres 8,750 sheets
Target ending inventory 29,375 board metres 9,000 sheets
Cost of beginning inventory $170,352 $109,375


Sales and inventory information, finished goods Chairs Tables
Expected sales in units 172,000 45,000
Selling price $80 $900
Target ending inventory in units 8,500 2,250
Beginning inventory in units 8,000 2,100
Beginning inventory in dollars $760,000 $477,000

• Carlton Ltd accounts for direct materials using a FIFO cost flow. It also uses a FIFO cost flow assumption for finished goods inventory.
• Chairs are manufactured in batches of 500, and tables are manufactured in batches of 50.
• It takes three hours to set up for a batch of chairs, and two hours to set up for a batch of tables.






The company uses activity-based costing and has classified all overhead costs as shown in the table below:
Cost type Budgeted variable Budgeted fixed Cost driver/allocation base
Manufacturing:
Materials handling $342,840 $600,000 Number of board metres used
Set-up 97,000 300,740 Set-up hours
Processing 789,250 5,900,000 Machine hours
Non-manufacturing:
Marketing 2,011,200 4,500,000 Sales revenue
Distribution 54,000 380,000 Number of deliveries

Delivery trucks transport units sold in delivery sizes of 500 chairs or 500 tables.


Required:

For the year 2015:

a. Prepare the sales budget.
b. Prepare the production budget in units.
c. Prepare the direct material usage budget and the direct material purchases budget.
d. Prepare the direct manufacturing labour cost budget.
e. Prepare the manufacturing overhead cost budget.
f. Prepare the budgeted unit cost of ending finished goods inventory and ending inventories budget.
g. Prepare the non-manufacturing overhead costs budget.
h. Prepare a budgeted income statement (ignore income taxes).
i. Compare the budgeted unit cost of a chair to its budgeted selling price. Why might the company continue to sell the chairs for only $80?

Related Discussions:- Bugeting

What is cost unit, What is Cost unit While the cost centres assists in ...

What is Cost unit While the cost centres assists in ascertaining costs by location, person, equipment, operation or process, cost unit is a unit of product, service or a combin

Special order manufacturer, Viti Ltd, located in southern Viti Levu, manufa...

Viti Ltd, located in southern Viti Levu, manufactures a variety of industrial valves and pipe fittings that are sold to customers in the eastern states. Currently, the company is o

Industrial Grinders, accepted#Regarding the Overhead costs, these are alloc...

accepted#Regarding the Overhead costs, these are allocated based on Direct Labor;

Accounting method, Accounting Method is the method by which income and expe...

Accounting Method is the method by which income and expenses are accounted for taxation purposes. The Internal Revenue Service needs taxpayers to select an accounting method that p

Illustrate the marginal cost pricing, Marginal cost or incremental cost pri...

Marginal cost or incremental cost pricing method: Here the company may work on the premise of recovering its marginal cost and getting a contribution towards its overheads. Thi

Interpratation of variance, INTERPRATATION OF VARIANCE Controllability,...

INTERPRATATION OF VARIANCE Controllability, Materiality and Trend are the interpretation of variance. The point of comparing flexed budget and real figures is to see what corre

Distinguish between income and substitution effects, Question 1: (a) Us...

Question 1: (a) Use indifference curves to distinguish between income and substitution effects. (b) Hence, using the above techniques explain why the demand curve slope down

Calculate earnings per share, EMERALD LTD is planning an expansion programm...

EMERALD LTD is planning an expansion programme,which will require Rs 30 crores & can be funded through one of the following 1.issue further equity share of Rs 100 each at par.

Definition of accounting, Definition of accounting Accounting is the pr...

Definition of accounting Accounting is the procedure of recognizing measuring and communicating economic information to allow informed judgments and decisions by the user’s inf

Tools of management accounting, Explain the tools of management accounting

Explain the tools of management accounting

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