Comprehensive budgeting problem; activity-based costing, operating and financial budgets. Tyva makes a very popular undyed cloth sandal in one style, but in Regular and Deluxe. The Regular sandals have cloth soles and the Deluxe sandals have cloth-covered wooden soles. Tyva is preparing its budget for June 2015 and has estimated sales based on past experience.

Other information for the month of June follows:

Input Prices

Direct materials

Cloth $5.25 per yard

Wood $7.50 per board foot

Direct manufacturing labor $15 per direct manufacturing labor-hour

Input Quantities per Unit of Output (per pair of sandals)

	Regular	Deluxe
Direct materials
Cloth	1.3 yards	1.5 yards
Wood	0	2 b.f.
Direct manufacturing labor-hours	5 hours	7 hours
Setup hours per batch	2 hours	3 hours

Inventory Information, Direct Materials

	Cloth	Wood
Beginning inventory	610 yards	800 b.f.
Target ending inventory	386 yards	295 b.f.
Cost of beginning inventory	$3,219	$6,060

Tyva accounts for direct materials using a FIFO cost flow assumption.

Sales and Inventory Information, Finished Goods

	Regular	Deluxe
Expected sales in units (pairs of sandals)	2,000	3.000
Selling price	$120	$195
Target ending inventory in units	400	600
Beginning inventory in units	250	650
Beginning inventory in dollars	$23,250	$92,625

Tyva uses a FIFO cost flow assumption for finished goods inventory.

All the sandals are made in batches of 50 pairs of sandals. Tyva incurs manufacturing overhead costs, marketing and general administration, and shipping costs. Besides materials and labor, manufacturing costs include setup, processing, and inspection costs. Tyva ships 40 pairs of sandals per shipment. Tyva uses activity-based costing and has classified all overhead costs for the month of June as shown in the following chart:

Cost Type	Denominator Activity	Rate
Manufacturing
Setup	Setup hours	$18 per setup hour
Processing	Direct man. Labor-hours	$1.80 per DMLH
Inspection	Number of pairs of sandals	$1.35 per pair
Nonmanufacturing
Marketing & general admin	Sales revenue	8%
Shipping	Number of shipments	$15 per shipment

Questions

1.Prepare each of the following for June:

a.Revenues budget

b.Production budget in units

c.Direct material usage budget and direct material purchases budget in both units and dollars, round to dollars

d.Direct manufacturing labor cost budget

e.Manufacturing overhead cost budgets for setup, processing, and inspection 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 and shipping costs budget