Yummi-Lik makes really big lollipops in two sizes, large and giant. Yummi-Lik sells these lollipops to convenience stores, fairs, schools for fundraisers, and in bulk on the Internet. Summer is approaching and Yummi-Lik is preparing its budget for the month of June. The lollipops are handmade, mostly out of sugar, and attached to wooden sticks. Expected sales are based on past experience. This company uses pounds of material as its standard measure.

Other information for the month of June follows:

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

Yummi-Lik uses a FIFO cost flow assumption for finished goods inventory. All the lollipops are made in batches of ten. 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. Yummy-Lik uses activity-based costing and has classified all overhead costs for the month of June as shown in the following chart:

REQUIRED
1. Prepare each of the following for June:
a. Revenue budget.
b. Production budget in units.
c. Direct material usage budget and direct material purchases budget.
d. Direct manufacturing labour cost budget.
e. Manufacturing overhead cost budgets for processing and setup activities.
f. Budgeted unit cost of ending finished goods inventory and ending inventories budget.
g. Cost of goods sold budget.
h. Marketing and general administration costs budget.
2. 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.
€¢ 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.
€¢ 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.
€¢ All other costs are paid in the month incurred.
€¢ Yummi-Lik is making monthly interest payments of 1% (12% per year) on a $20,000 long-term loan.
€¢ 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.
€¢ 40% of processing and setup costs, and 30% of marketing and general administration costs are amortization.

3. Prepare a budgeted income statement for June and a budgeted balance sheet for Yummi-Lik as of June 30.

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Input prices Direct materi Sugar Sticks $0.50 per pound (lb) $0.30 each $8 per direct manufacturing labour-hour Direct manufacturing labour Input quantities per unit of output Large Giant Direct materials Sugar 025 lb 0.50 lb Sticks tup hours per batch Inventory information, direct materials Direct manufacturing labour-hours (DMLII) Set 0.20 hous 0.25 hours 0.08 hous 0.09 hours eginning inventory Target ending inventory Cost of beginning inventory Sugar 125 lb 240 lb S64 Sticks 350 480 $105 Sales and inventory information, finished goods Expected sales in units Selling price Target ending inventory in units Beginning inventory in units Large 3,000 $3 300 200 S500 Giant 1,800 $4 180 150 $474 eginning inventorv in dollars Cost Type Denominator Activity Rate Manufacturing: Setup Processing Setup hours Direct manufacturing S20 per setup hr labour-hours (DMLII)S1.70 per DMLII Non-manufacturig Marketing and general administration Sales revenue 10% Yummi-Lik Balance Sheet May 31 Assets S 587 4,704 169 Cash Accounts receivable S 4,800 96 2 Less: Allowance for bad debts Inventories: Direct materials Finished goods Fixed assets Less: Accumulated amortization Total assets 974 190,000 55,759 134,241 $140,675 Liabilities and Equity S 696 500 200 20,000 10,000 109,279 140,675 Accounts payable Taxes payable Interest payable ong-term debt Comimon shares Retained earnings Total liabilities and equity