Grant Shew is the product manager at Yummi-Lik. Yummi-Lik sells really big lollipops in two sizes,...
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Grant Shew is the product manager at Yummi-Lik. Yummi-Lik sells really big lollipops in two sizes, large and giant lollipops to convenience stores, at fairs, and to schools for fundraisers, as well as a bulk channel on the internet. The lollipops are handmade, mostly out of sugar, and attached to wooden sticks. Grant is preparing the sales budget for the summer, knowing a successful sales season will have a big impact on his performance review. Expected sales are based on past experience. Other information for the month of June follows: Input Prices Direct materials Sugar Sticks Direct manufacturing labour Input Quantities per Unit of Output Direct materials Sugar Sticks Direct manufacturing labour-hours (DMLH) Setup-hours per batch $0.50 per kilogram (lb) $0.30 each $8 per direct manufacturing labour-hour Inventory Information, Direct Materials Beginning inventory Target ending inventory Cost of beginning inventory Sales and Inventory Information, Finished Goods Expected sales in units Selling price Target ending inventory in units Beginning inventory in units Beginning inventory in dollars Large 0.25 lb 1 0.20 hours 0.08 hours Sugar 125 lb 240 lb $64 Large 3,000 3 Yummi-Lik accounts for direct materials using a FIFO cost flow assumption. $ Giant 300 200 $ 500 0.50 lb 1 0.25 hours 0.09 hours Sticks 350 480 $105 Giant 1,800 4 180 150 S 474 $ Yummi-Lik uses a FIFO cost flow assumption for finished goods inventory. All the lollipops are made in batches of 10. Yummi-Lik incurs manufacturing overhead costs, and marketing and general administration costs, but customers pay for shipping. Other than manufacturing labour costs, monthly processing costs are very low. Yummi-Lik uses ABC and has classified all overhead costs for the month of June as shown in the following chart: Manufacturing: Setup Processing Cost Type The following information is necessary: Grant knows that 80% of sales are on account, of which half are collected in the month of the sale, 49% are collected the following month, and 1% are never collected and written off as bad debts, which has an impact on net revenues. In addition to this, all purchases of materials are on account. Yummi-Lik pays for 70% of purchases in the month of purchase and 30% in the following month. However, all other costs are paid in the month incurred. Knowing this, Grant has to create 2. A cash budget for Yummi-Lik for June 3. A budgeted income statement for June and a budgeted balance sheet for Yummi-Lik as of June 30 Assets Cash Denominator Activity i. Yummi-Lik’s balance sheet for May 31 follows. Use it and the following information to prepare a cash budget for Yummi-Lik for June. Setup-hours Direct manufacturing labour-hours (DMLH) ii. Yummi-Lik is making monthly interest payments of 1% (12% per year) on a $20,000 long-term loan. Accounts receivable Less: Allowance for bad debts Inventories: iii. Yummi-Lik plans to pay the $500 of taxes owed as of May 31 in the month of June. Income tax expense for June is zero. iv. 40% of processing and setup costs, and 30% of marketing and general administration costs, are depreciation. Yummi-Lik Balance Sheet May 31 Direct materials Finished goods Rate Fixed assets Less: Accumulated depreciation Total assets $20 per setup-hour $1.70 per DMLH Liabilities and Equity Accounts payable Taxes payable Interest payable Long-term debt Common shares Retained earnings Total liabilities and equity $ 4,800 96 190,000 55,759 $ 587 4,704 $ 169 974 134,241 $140,675 696 500 200 20,000 10,000 109,279 $140,675 Grant Shew is the product manager at Yummi-Lik. Yummi-Lik sells really big lollipops in two sizes, large and giant lollipops to convenience stores, at fairs, and to schools for fundraisers, as well as a bulk channel on the internet. The lollipops are handmade, mostly out of sugar, and attached to wooden sticks. Grant is preparing the sales budget for the summer, knowing a successful sales season will have a big impact on his performance review. Expected sales are based on past experience. Other information for the month of June follows: Input Prices Direct materials Sugar Sticks Direct manufacturing labour Input Quantities per Unit of Output Direct materials Sugar Sticks Direct manufacturing labour-hours (DMLH) Setup-hours per batch $0.50 per kilogram (lb) $0.30 each $8 per direct manufacturing labour-hour Inventory Information, Direct Materials Beginning inventory Target ending inventory Cost of beginning inventory Sales and Inventory Information, Finished Goods Expected sales in units Selling price Target ending inventory in units Beginning inventory in units Beginning inventory in dollars Large 0.25 lb 1 0.20 hours 0.08 hours Sugar 125 lb 240 lb $64 Large 3,000 3 Yummi-Lik accounts for direct materials using a FIFO cost flow assumption. $ Giant 300 200 $ 500 0.50 lb 1 0.25 hours 0.09 hours Sticks 350 480 $105 Giant 1,800 4 180 150 S 474 $ Yummi-Lik uses a FIFO cost flow assumption for finished goods inventory. All the lollipops are made in batches of 10. Yummi-Lik incurs manufacturing overhead costs, and marketing and general administration costs, but customers pay for shipping. Other than manufacturing labour costs, monthly processing costs are very low. Yummi-Lik uses ABC and has classified all overhead costs for the month of June as shown in the following chart: Manufacturing: Setup Processing Cost Type The following information is necessary: Grant knows that 80% of sales are on account, of which half are collected in the month of the sale, 49% are collected the following month, and 1% are never collected and written off as bad debts, which has an impact on net revenues. In addition to this, all purchases of materials are on account. Yummi-Lik pays for 70% of purchases in the month of purchase and 30% in the following month. However, all other costs are paid in the month incurred. Knowing this, Grant has to create 2. A cash budget for Yummi-Lik for June 3. A budgeted income statement for June and a budgeted balance sheet for Yummi-Lik as of June 30 Assets Cash Denominator Activity i. Yummi-Lik’s balance sheet for May 31 follows. Use it and the following information to prepare a cash budget for Yummi-Lik for June. Setup-hours Direct manufacturing labour-hours (DMLH) ii. Yummi-Lik is making monthly interest payments of 1% (12% per year) on a $20,000 long-term loan. Accounts receivable Less: Allowance for bad debts Inventories: iii. Yummi-Lik plans to pay the $500 of taxes owed as of May 31 in the month of June. Income tax expense for June is zero. iv. 40% of processing and setup costs, and 30% of marketing and general administration costs, are depreciation. Yummi-Lik Balance Sheet May 31 Direct materials Finished goods Rate Fixed assets Less: Accumulated depreciation Total assets $20 per setup-hour $1.70 per DMLH Liabilities and Equity Accounts payable Taxes payable Interest payable Long-term debt Common shares Retained earnings Total liabilities and equity $ 4,800 96 190,000 55,759 $ 587 4,704 $ 169 974 134,241 $140,675 696 500 200 20,000 10,000 109,279 $140,675
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1 a b d Large Giant Total g Large Giant Revenue Budget For the Month of June Units 3000 1800 Budgeted unit sales Add Target ending finished goods inventory Total required units Deduct beginning finish... View the full answer
Related Book For
Cost Accounting A Managerial Emphasis
ISBN: 978-0133392883
6th Canadian edition
Authors: Horngren, Srikant Datar, George Foster, Madhav Rajan, Christ
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