Dinettes Inc. operates at capacity and makes glass-topped dining tables and wooden chairs that are typically sold

Question:

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:

Dinettes Inc. operates at capacity and makes glass-topped dining tables

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.

Ending Inventory
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula                Ending Inventory Formula =...
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Related Book For  book-img-for-question

Cost Accounting A Managerial Emphasis

ISBN: 978-0133138443

7th Canadian Edition

Authors: Srikant M. Datar, Madhav V. Rajan, Charles T. Horngren, Louis Beaubien, Chris Graham

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