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

Managerial accounting, Managerial Accounting Before going to Managerial...

Managerial Accounting Before going to Managerial Accounting let us discuss a bit about Financial Accounting. Financial accounting is concerned with reporting to the external pa

Credit investigation, Once the credit information is accumulated the subseq...

Once the credit information is accumulated the subsequent step is to analyze the gathered information and isolate those matters that may need further investigation. The factors whi

Markov chains, Markov Chains: Markov Chains are named after the Russia...

Markov Chains: Markov Chains are named after the Russian statistician A.A Markov who developed probabilistic models that are often applicable to decision making problems in bu

Costs and benefits of factoring, Two types of costs concerned in factoring ...

Two types of costs concerned in factoring are as: 1) The service fee or factoring commission 2) The interest on advances granted through the factor to the firm. Factoring

What is replacement cost, Replacement cost It is the cost of replacing ...

Replacement cost It is the cost of replacing a material or asset, by purchase from the current market. If an X material was originally purchased @ Rs. 250 per Kg. And know i

Break even analysis, BREAK EVEN ANALYSIS Break even analysis is mainly us...

BREAK EVEN ANALYSIS Break even analysis is mainly used to explain the relationship between the cost incurred, the volume operated at and the profit earned. To compute the breakev

Decision making process, Decision Making Process Decision making is the...

Decision Making Process Decision making is the process of choosing among alternatives. There are 7 steps that should be followed as shown in figure below:   Figure:

Explian national income and economic welfare, Question 1: (a) Discuss t...

Question 1: (a) Discuss the main features and problems which Mauritius has to face as a small island developing country. (b) What are the factors which have led to the f

Steps of graphic analysis, Steps of Graphic Analysis There are four ste...

Steps of Graphic Analysis There are four steps in using graph paper to study cost-volume relationships: Step 1: Compute the scale which you will use: Volume is considered

Contigency theory, CONTIGENCY THEORY Some researchers have argued that ...

CONTIGENCY THEORY Some researchers have argued that the context in which budgetary control is used is as important as the style in which it is implemented and used. This is ter

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