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

Sources of working capital, Sources of Working Capital Finance Working ...

Sources of Working Capital Finance Working capital finance may be classified in the subsequent: Spontaneous Source of Finance Finance that naturally arises in

Capital budgeting – planning investments, The management of Popular Stores ...

The management of Popular Stores Sdn. Bhd. are in the process of exploring the company’s investment opportunities.

Coefficient of determination, Coefficient of Determination (r 2 ) If th...

Coefficient of Determination (r 2 ) If the regression line calculated by the least square method were to fit the actual observations perfectly, then all observed points would l

Budget, advantage and disadvantage of incremental budget

advantage and disadvantage of incremental budget

Revolving credit, The revolving credit facility will be specified by the ba...

The revolving credit facility will be specified by the banker to the customer through providing specific amount of credit facility for a continuous basis. The borrower will not be

Two-person-zero-sum games, Two-person, zero-sum games Two players X & Y...

Two-person, zero-sum games Two players X & Y have two alternatives. They show their choices by pressing two types of buttons in front of them but they cannot see the opponents

Management, Discuss the different roles played by the qualitative and quant...

Discuss the different roles played by the qualitative and quantitative approaches to managerial decision making

What is the responsibility of operating budget, What is the Responsibility ...

What is the Responsibility of operating budget when the operating budget of a firm is constructed in terms of responsibility areas it is called the responsibility budget shows

How can we draw a break even chart, How can we draw a break even chart ...

How can we draw a break even chart Under this method the variable cost line is drawn first and then fixed cost line is drawn over and parallel to the variable cost line. The fi

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

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