Reference no: EM13841043

Comprehensive budgeting problem; activity-based costing, operating and financial budgets. Tyva makes a very popular undyed cloth sandal in one style, but in Regular and Deluxe. The Regular sandals have cloth soles and the Deluxe sandals have cloth-covered wooden soles. Tyva is preparing its budget for June 2013 and has estimated sales based on past experience.

Other information for the month of June follows:

Input Prices Direct materials

Cloth                                      $5.25 per yard

Wood                                                        57.50 per board foot

Direct manufacturing labor       515 per direct manufacturing labor-hour

Input Quantities per Unit of Output (per pair of sandals)

	Regular	Deluxe
Direct materials
Cloth	1.3 yards	1.5 yards
Wood	0	2 b.f.
Direct manufacturing labor-hours (DMLH)	5 hours	7 hours
Setup-hours per batch	2 hours	3 hours

Inventory Information, Direct Materials

	Cloth	Wood
Beginning inventory	610 yards	800 b.f.
Target ending inventory	386 yards	295 b.f.
Cost of beginning inventory	$3,219	$6,060

Tyva accounts for direct materials using FIFO cost flow assumption.

Sales and Inventory Information, Finished Goods

	Regular	Deluxe
Expected sales in units (pairs of sandals)	2,000	3,000
Selling price	$120	$195
Target ending inventory in units	400	600
Beginning inventory in units	250	650
Beginning inventory in dollars	$23,250	$92,625

Tvya uses FIFO cost flow assumption for finished goods inventory.

All the sandals are made in batches of 50 pairs of sandals. Tvya incurs manufacturing overhead costs, marketing and general administration, and shipping costs. Besides materials and labor, manufacturing costs include setup, processing and inspection costs. Tvya ships 40 pairs of sandals per shipment. Tvya activity-based costing and has classified all overhead costs for the month of June as shown in the following chart:

Cost Type	Denominator Activity	Rate
Manufacturing
Setup	Setup-hours	$18 per setup
Processing	Direct manufacturing labor hours	$1.80 per DMLH
Inspection	Number of pairs of sandals	$1.35 per pair
Nonmanufacturing
Marketing and general administration	Sales revenue	8%
Shipping	Number of shipments	$15 per shipment

Required:

1. Prepare each of the following for June:

a. Revenue budget

b. Production budget in units

c. Direct material usage budget and direct material purchases budget in both units and dollar; round to dollars.

d. Direct manufacturing labor cost budget

e. Manufacturing overhead cost budgets for processing and setup activities

f. Budget unit cost of ending finished goods inventory and ending inventories budget

g. Cost of goods sold budget

h. Market and general administration costs budget