Dinettes Inc. operates at capacity and makes glass-topped dining tables and wooden chairs that are 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. Dinettes Inc. is planning its annual budget for fiscal year 2016. Information for 2016 follows:

Input prices

Direct materials

Wood......................................................$ 1.60 per board foot

Glass................................................................$12 per sheet

Direct manufacturing labour...$15 per direct manufacturing labour-hour

Input quantities per unit of output

Chairs Tables

Direct materials

Wood..................................5 board feet.......................7 board feet

Glass..............................................-............................2 sheets

Direct manufacturing labour..............4 hours.............................8 hours

Machine-hours (MH)........................3 MH..............................5 MH

Inventory information, direct materials

WoodGlass

Beginning inventory....................109,200 board feet....................8,750 sheets

Target ending inventory...............117,500 board feet....................9,000 sheets

Cost of beginning inventory......................$170,352........................$109,375

Dinettes Inc. accounts for direct materials using a FIFO cost flow.

Sales and inventory information, finished goods

ChairsTables

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

Dinettes Inc. 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.

Dinettes Inc. uses activity-based costing and has classified all overhead costs as shown in the table below:

Delivery trucks transport units sold in delivery sizes of 500 chairs or 500 tables.
Required
Do the following for the year 2016:
1. Prepare the revenue budget.
2. Use the revenue budget to:
a. Find the budgeted allocation rate for marketing costs.
b. Find the budgeted number of deliveries and allocation rate for distribution costs.
3. Prepare the production budget in units.

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Budgeted variable Budgeted fixed Cost driver/ Allocation base Cost type Manufacturing: Materials handling Setup Processing 342,840 97,000 789,250 600,000 300,740 5,900,000 Number of board feet used Setup-hours Machine-hours Non-manufacturing: Marketing Distribution 2,011,200 54,000 4,500,000 380,000 Sales revenue Number of deliveries