REVEL for Horngren's Cost Accounting: A Managerial Emphasis -- Access Card (16th Edition) (What's New in Accounting)
16th Edition
ISBN: 9780134789705
Author: Srikant M. Datar, Madhav V. Rajan
Publisher: PEARSON
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Chapter 6, Problem 6.40P
Comprehensive problem with ABC costing. Animal Gear 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 | $5 per pound |
| Metal | $4 per pound |
| Direct manufacturing labor | $10 per direct manufacturing labor-hour |
Input Quantities per Unit of Output
| Cat-allac | Dog-eriffic | |
| Direct materials | ||
| Plastic | 4 pounds | 6 pounds |
| Metal | 0.5 pounds | 1 pound |
| Direct manufacturing labor-hours | 3 hours | 5 hours |
| Machine-hours (MH) | 11 MH | 19 MH |
Animal Gear accounts for direct materials using a FIFO cost-flow assumption.
Sales and Inventory Information, Finished Goods
| Cat-allac | Dog-eriffic | |
| Expected sales in units | 530 | 225 |
| Selling price | $ 205 | $ 310 |
| Target ending inventory in units | 30 | 10 |
| Beginning inventory in units | 10 | 19 |
| Beginning inventory in dollars | $1,000 | $4,650 |
Animal Gear uses a FIFO cost-flow assumption for finished-goods inventory.
Animal Gear uses an activity-based costing system and classifies overhead into three activity pools: Setup, Processing, and Inspection. Activity rates for these activities are $105 per setup-hour, $10 per machine-hour, and $15 per inspection-hour, respectively. Other information follows:
Cost-Driver Information
| Cat-allac | Dog-eriffic | |
| Number of units per batch | 25 | 9 |
| Setup time per batch | 1.50 hours | 1.75 hours |
| inspection time per batch | 0.5 hour | 0.7 hour |
If necessary, round up to calculate number of batches.
Nonmanufacturing fixed costs for March equal $32.000, 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. Revenues budget
- 2. Production budget in units
- 3. Direct material usage budget and direct material purchases budget
- 4. Direct
manufacturing labor cost budget - 5. Manufacturing overhead cost budgets for each of the three activities
- 6. Budgeted unit cost of ending finished-goods inventory and ending inventories budget
- 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 Gear’s management team better manage the company?
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Chapter 6 Solutions
REVEL for Horngren's Cost Accounting: A Managerial Emphasis -- Access Card (16th Edition) (What's New in Accounting)
Ch. 6 - What are the four elements of the budgeting cycle?Ch. 6 - Define master budget.Ch. 6 - Strategy, plans, and budgets are unrelated to ore...Ch. 6 - Budgeted performance is a better criterion than...Ch. 6 - Production managers and marketing managers are...Ch. 6 - Budgets meet the cost-benefit test. They force...Ch. 6 - Define rolling budget. Give an example.Ch. 6 - Outline the steps in preparing an operating...Ch. 6 - The sales forecast is the cornerstone for...Ch. 6 - Prob. 6.10Q
Ch. 6 - Define Kaizen budgeting.Ch. 6 - Prob. 6.12QCh. 6 - Explain how the choice of the type of...Ch. 6 - What are some additional considerations that arise...Ch. 6 - Prob. 6.15QCh. 6 - Master budget. Which of the following statements...Ch. 6 - Operating and financial budgets. Which of the...Ch. 6 - Production budget. Superior Industries sales...Ch. 6 - Responsibility centers. Elmhurst Corporation is...Ch. 6 - Cash budget. Mary Jacobs, the controller of the...Ch. 6 - Sales budget, service setting. In 2017 Hart Sons,...Ch. 6 - Sales and production budget. The Coby Company...Ch. 6 - Direct material budget. Dawson Co. produces wine....Ch. 6 - Material purchases budget. The McGrath Company has...Ch. 6 - Revenues, production, and purchases budgets. The...Ch. 6 - Revenues and production budget. Saphire, Inc.,...Ch. 6 - Budgeting; direct material usage, manufacturing...Ch. 6 - Budgeting, service company. Ever Clean Company...Ch. 6 - Budgets for production and direct manufacturing...Ch. 6 - Activity-based budgeting. The Jerico store of...Ch. 6 - Kaizen approach to activity-based budgeting...Ch. 6 - Responsibility and controllability. Consider each...Ch. 6 - Responsibility, controllability, and stretch...Ch. 6 - Cash flow analysis, sensitivity analysis....Ch. 6 - Budget schedules for a manufacturer. Hale...Ch. 6 - Budgeted costs, Kaizen improvements environmental...Ch. 6 - Revenue and production budgets. (CPA, adapted) The...Ch. 6 - Budgeted income statement. (CMA, adapted) Smart...Ch. 6 - Prob. 6.39PCh. 6 - Comprehensive problem with ABC costing. Animal...Ch. 6 - Cash budget (continuation of 6-40). Refer to the...Ch. 6 - Comprehensive operating budget. Skulas, Inc.,...Ch. 6 - Cash budgeting, budgeted balance sheet....Ch. 6 - Comprehensive problem; ABC manufacturing, two...Ch. 6 - Cash budget. (Continuation of 6-44) (Appendix)...Ch. 6 - Budgeting and ethics. Jayzee Company manufactures...Ch. 6 - Kaizen budgeting for carbon emissions. Apex...Ch. 6 - Comprehensive budgeting problem; activity-based...
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