Company makes two pet carriers, the Cat-allac and the Dog-eriffic. They are both made of plastic with metal doors, but the Cat-allac is smaller. Information for the two products for the month of April is given in the following tables: Input Prices Direct materials Plastic $6 per pound Metal $5 per pound Direct manufacturing labor $12 per direct manufacturing labor hour Input Quantities per Unit of Output Cat-allac Dog-eriffic Direct materials Plastic 5 pounds 7 pounds Metal 0.5 pounds 1 pound Direct manufacturing labor-hours (DMLH) 3 hours 5 hours Machine-hours (MH) 12 MH 18 MH Inventory Information, Direct Materials Plastic Metal Beginning inventory 220 pounds 50 pounds Target ending inventory 390 pounds 45 pounds Cost of beginning inventory $880 $155 accounts for direct materials using a FIFO cost-flow assumption. Sales and Inventory Information, Finished Goods Cat-allac Dog-eriffic Expected sales in units 460 255 Selling price $210 $300 Target ending inventory in units 40 20 Beginning inventory in units 20 35 Beginning inventory in dollars $2,000 $6,510 Animal Transport uses a FIFO cost-flow assumption for finished-goods inventory. Animal Transport uses an activity-based costing system and classifies overhead into three activity pools: Setup, Processing, and Inspection. Activity rates for these activities are $120per setup-hour, $10 per machine-hour, and $10 per inspection-hour, respectively. Other information follows: Cost Driver Information Cat-allac Dog-errific Number of units per batch 20 10 Setup time per batch 1.25 hours 2.25 hours Inspection time per batch 0.5 hours 0.5 hour If necessary, round up to calculate number of batches. Nonmanufacturing fixed costs for March equal $30,000, half of which are salaries. Salaries are expected to increase 5% in April. Other nonmanufacturing fixed costs will remain the same. The only variable nonmanufacturing cost is sales commission, equal to 1% of sales revenue. Prepare the following for April: 1. 2. 3. 4. 5. 6. 7. Cost of goods sold budget 8. Nonmanufacturing costs budget 9. Budgeted income statement (ignore income taxes) 10. How does preparing the budget help Animal Transport's management team better manage the company?

Company makes two pet carriers, the Cat-allac and the Dog-eriffic. They are both made of plastic with metal doors, but the Cat-allac is smaller. Information for the two products for the month of April is given in the following tables: Input Prices Direct materials Plastic $6 per pound Metal $5 per pound Direct manufacturing labor $12 per direct manufacturing labor hour Input Quantities per Unit of Output Cat-allac Dog-eriffic Direct materials Plastic 5 pounds 7 pounds Metal 0.5 pounds 1 pound Direct manufacturing labor-hours (DMLH) 3 hours 5 hours Machine-hours (MH) 12 MH 18 MH Inventory Information, Direct Materials Plastic Metal Beginning inventory 220 pounds 50 pounds Target ending inventory 390 pounds 45 pounds Cost of beginning inventory $880 $155 accounts for direct materials using a FIFO cost-flow assumption. Sales and Inventory Information, Finished Goods Cat-allac Dog-eriffic Expected sales in units 460 255 Selling price $210 $300 Target ending inventory in units 40 20 Beginning inventory in units 20 35 Beginning inventory in dollars $2,000 $6,510 Animal Transport uses a FIFO cost-flow assumption for finished-goods inventory. Animal Transport uses an activity-based costing system and classifies overhead into three activity pools: Setup, Processing, and Inspection. Activity rates for these activities are $120per setup-hour, $10 per machine-hour, and $10 per inspection-hour, respectively. Other information follows: Cost Driver Information Cat-allac Dog-errific Number of units per batch 20 10 Setup time per batch 1.25 hours 2.25 hours Inspection time per batch 0.5 hours 0.5 hour If necessary, round up to calculate number of batches. Nonmanufacturing fixed costs for March equal $30,000, half of which are salaries. Salaries are expected to increase 5% in April. Other nonmanufacturing fixed costs will remain the same. The only variable nonmanufacturing cost is sales commission, equal to 1% of sales revenue. Prepare the following for April: 1. 2. 3. 4. 5. 6. 7. Cost of goods sold budget 8. Nonmanufacturing costs budget 9. Budgeted income statement (ignore income taxes) 10. How does preparing the budget help Animal Transport's management team better manage the company?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Input Prices
Direct materials
Plastic	$6	per pound
Metal	$5	per pound
Direct manufacturing labor	$12	per direct manufacturing labor hour

Input Quantities per Unit of Output
	Cat-allac	Dog-eriffic
Direct materials
Plastic	5	pounds	7	pounds
Metal	0.5	pounds	1	pound
Direct manufacturing labor-hours (DMLH)	3	hours	5	hours
Machine-hours (MH)	12	MH	18	MH

Inventory Information, Direct Materials
	Plastic	Metal
Beginning inventory	220	pounds	50	pounds
Target ending inventory	390	pounds	45	pounds
Cost of beginning inventory	$880	$155

accounts for direct materials using a FIFO cost-flow assumption.

Sales and Inventory Information, Finished Goods
	Cat-allac	Dog-eriffic
Expected sales in units	460	255
Selling price	$210	$300
Target ending inventory in units	40	20
Beginning inventory in units	20	35
Beginning inventory in dollars	$2,000	$6,510

Animal Transport

uses a FIFO cost-flow assumption for finished-goods inventory.

Animal Transport

uses an activity-based costing system and classifies overhead into three activity pools: Setup, Processing, and Inspection. Activity rates for these activities are $120per setup-hour, $10 per machine-hour, and $10 per inspection-hour, respectively. Other information follows:

Cost Driver Information
	Cat-allac	Dog-errific
Number of units per batch	20	10
Setup time per batch	1.25	hours	2.25	hours
Inspection time per batch	0.5	hours	0.5	hour

If necessary, round up to calculate number of batches.

Nonmanufacturing fixed costs for March equal

$30,000, half of which are salaries. Salaries are expected to increase

5% in April. Other nonmanufacturing fixed costs will remain the same. The only variable nonmanufacturing cost is sales commission, equal to 1% of sales revenue.

Prepare the following for April:

1.
2.
3.
4.
5.
6.
7.		Cost of goods sold budget
8.		Nonmanufacturing costs budget
9.		Budgeted income statement (ignore income taxes)
10.		How does preparing the budget help Animal Transport's management team better manage the company?

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