Hazlett, Inc., operates at capacity and makes plastic combs and hairbrushes. Although the combs and brushes are a matching set, they are sold individually and so the sales mix is not 1: 1. Hazlett’s management is planning its annual budget for fiscal year 2015. Here is information for 2015:

Hazlett accounts for direct materials using a FIFO cost flow.

Hazlett uses a FIFO cost flow assumption for finished goods inventory.
Combs are manufactured in batches of 200, and brushes are manufactured in batches of 100. It takes 20 minutes to set up for a batch of combs and 1 hour to set up for a batch of brushes.
Hazlett uses activity- based costing and has classified all overhead costs as shown in the following table. Budgeted fixed overhead costs vary with capacity. Hazlett operates at capacity so budgeted fixed overhead cost per unit equals the budgeted fixed overhead costs divided by the budgeted quantities of the cost allocation base.

Delivery trucks transport units sold in delivery sizes of 1,000 combs or 1,000 brushes. Do the following for the year 2015:

Required
1. Prepare the revenues budget.
2. Use the revenues 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.
4. Use the production budget to:
a. Find the budgeted number of setups and setup- hours and the allocation rate for setup costs.
b. Find the budgeted total machine- hours and the allocation rate for processing costs.
c. Find the budgeted total units produced and the allocation rate for inspection costs.
5. Prepare the direct material usage budget and the direct material purchases budgets in both units and dollars; round to whole dollars.
6. Use the direct material usage budget to find the budgeted allocation rate for materials- handling costs.
7. Prepare the direct manufacturing labor cost budget.
8. Prepare the manufacturing overhead cost budget for materials handling, setup, processing, and ­inspection costs.
9. Prepare the budgeted unit cost of ending finished goods inventory and ending inventories budget.
10. Prepare the cost of goods sold budget.
11. Prepare the nonmanufacturing overhead costs budget for marketing and distribution.
12. Prepare a budgeted income statement (ignore income taxes).
13. How does preparing the budget help Hazlett’s management team better manage thecompany?

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Input Prices Direct materials Plastic Bristles $0.30 per ounce $0.75 per bunch S 18 per direct manufacturing labor-hour Direct manufacturing labor Input Quantities per Unit of Output Combs Brushes Direct materials Plastic 5 ounces Bristles Direct manufacturing labor Machine-hours (MH 8 ounces 16 bunches 0.2 hours 0.1 MH 0.05 hours 0.025 MH Inventory Information, Direct Materials Beginning inventory Target ending inventory Cost of beginning inventory Plastic 1,600 ounces 1,766 ounces $456 Bristles 1820 bunches 2272 bunches $1,419 Sales and Inventory Information, Finished Goods Combs Expected sales in units Selling price Target ending inventory in units Beginning inventory in units Beginning inventory in dollars Brushes 14,000 $ 30 1,400 1,200 27,180 12,000 1,200 600 $ 2700 Cost Type Manufacturing Budgeted Variable Budgeted Fixed Cost Driver/Allocation Base Materials handling Setup Processing Inspection $17,235 10 245 11,640 10,500 $22,500 16,650 30,000 1,560 Number of ounces of plastic used Setup-hours Machine-hours Number of units produced Nonmanufacturing Marketing Distribution $90,000 1,170 $21,150 Sales revenue Number of delivenes