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

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

Theory of metagames, THEORY OF METAGAMES This theory appears to describ...

THEORY OF METAGAMES This theory appears to describe how most people play non-zero sum games involving any number of persons. Prisoner's dilemma is an example of this; the ai

Learning curve theory, LEARNING CURVE THEORY The first time a new opera...

LEARNING CURVE THEORY The first time a new operation is performed both workers and operating procedures are untried but as the operation is replaced the workers becomes more fa

Lease accounting, question:lease accounting implicit rate unknown,20%increm...

question:lease accounting implicit rate unknown,20%incremental rate leaseterm 4 years,find implicit rate using trial and error method.i know nothing about trial and error method in

Information system project management, Hi there, i am looking an expert to ...

Hi there, i am looking an expert to make my assignments for this subject and i do have other subjects as well. Let me know how you can go through my assignment.

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

Disadvantages of zero base budgeting 1) It is not suitable for all the activities in an organization 2) It has limited application in a profit making organization. In this c

Implementation of the decisions, Implementation of the Decisions Once a...

Implementation of the Decisions Once alternative courses of action have been chosen, they must be implemented as part of the budgeting procedure. The budget is a financial plan

Advance factoring and maturity factoring, Advance Factoring and Maturity Fa...

Advance Factoring and Maturity Factoring: In both recourse and non-recourse factoring whether the factor advances cash against book debts to the client instantly on assignment

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

Alternative performance measures, Alternative performance measures Ther...

Alternative performance measures There are various measures that can be used to measure performance of a decentralized company. The major ones are: •    Return on Investmen

Write Your Message!

Captcha
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!

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