ACC 2613_Management Accounting 1_George Ltd_Budgets

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Description

ACC 2613

Management Accounting 1

Semester 1, 2014

Assignment

George Ltd manufactures two types of coils used in electric motors. The two types are: C20 and D40. They both require plastic and metal. Information for the two products for the month of April is given in the following tables:

Input prices

Direct materials

Plastic

$4 per kilogram

Metal

$3 per kilogram

Direct manufacturing labour

$10 per direct manufacturing labour hour

Input quantities per unit of output

C20

D40

Direct materials

Plastic

4 kilograms

6 kilograms

Metal

0.5 kilogram

1 kilogram

Direct manufacturing labour-hours (DMLH)

3 hours

5 hours

Machine-hours (MH)

10 MH

18MH

Inventory information, direct materials

Plastic

Metal

Beginning inventory

250 kilograms

60 kilograms

Target ending inventory

380 kilograms

55 kilograms

Cost of beginning inventory

$950

$180

The company accounts for direct materials using a FIFO cost flow assumption.

Sales and inventory information, finished goods

C20

D40

Expected sales in units

500

300

Selling price

$160

$250

Target ending inventory in units

35

15

Beginning inventory in units

15

30

Beginning inventory in dollars

$1500

$5580

The company uses:

· a FIFO cost flow assumption for finished goods inventory.

· an activity-based costing system and classifies overhead into three activity pools: Set-up, Processing and Inspection. Activity rates for these activities are $100 per set-up hour. $5 per machine-hour and $16 per inspection-hour, respectively.

Other information is as follows:

Cost driver information

C20

D40

Number of units per batch

20

15

Set-up time per batch

1.5 hours

1.75 hours

Inspection time per batch

0.5 hour

0.6 hour

Non-manufacturing fixed costs for March equal $36,000 of which half are salaries. Salaries are expected to increase by 5% in April. The only variable non-manufacturing cost is sales commission equal to 1% of sales revenue.

Required:

Prepare the following for April:

a. Sales budget

b. Production budget in units

c. Direct material usage budget and direct material purchases budget

d. Manufacturing overhead cost budgets for each of the three activities

e. Budgeted income statement (ignore income taxes)


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