6-39 Comprehensive problem with ABC costing. Animal Gear Company makes two pet cari ers, the Cat-allac and the Dog-eriffic. They are both made of plastic with metal doors, but the Cat-allas Animal Gear uses an activity-based costing system and classifies overhead into three activity pool Setup, Processing, and Inspection Activity rates for these activities are $105 per setup-hour $10 per 3. What steps can Du goals of the firm? LO 2 smaller. Information for the two products for the month of April is given in the following tables: Input Prices Direct materials Plastic $5 per pound Metal $ 4 per pound Direct manufacturing labour $10 per direct manufacturing labour-hour Input Quantities per Unit of Output Cat-allac Dog-eriffic Direct materials Plastic 4 pounds 6 pounds Metal 0.5 pounds 1 pound Direct manufacturing labour-hours 3 hours 5 hours Machine-hours (MH) 11 MH 19 MH Inventory Information, Direct Materials Plastic Metal Beginning inventory 290 pounds 70 pounds Target ending inventory 65 pounds Cost of beginning inventory $1,102 $217 Animal Gear accounts for direct materials using a FIFO cost-flow assumption. Sales and Inventory Information, Finished Goods Expected sales in units Dog-eriffic 530 Selling price 225 Target ending inventory in units $ 310 Beginning inventory in units 30 10 10 19 410 pounds Cat-allac $ 205 Beginning inventory in dollars $1,000 Animal Gear uses a FIFO cost-flow assumption for finished-goods inventory. $4,650 machine-hour, and $15 per inspection-hour, respectively. Other information follows: If necessary, round up to calculate number of batches. Nonmanufacturing fixed costs for March equal $32,000, half of which are salaries. Salaries are able nonmanufacturing cost is sales commission, equal to 1% of sales revenue. expected to increase 5% in April. Other nonmanufacturing fixed costs will remain the same. The only vari- ASSIGNMENT Cost-Driver Information Number of units per batch Setup time per batch Inspection time per batch Cat-allac 25 1.50 hours 0.5 hour Dog-eriffic 9 1.75 hours 0.7 hour Required Prepare the following for April: 1. Revenues budget 2 Production budget in units 3. Direct material usage budget and direct material purchases budget 4. Direct manufacturing labour cost budget 5. Manufacturing overhead cost budgets for each of the three activities & Budgeted unit cost of ending finished-goods inventory and ending inventories budget 1. Cost of goods sold budget & Nonmanufacturing costs budget 9. Budgeted income statement (ignore income taxes) 10. How does preparing the budget help Animal Gear's management team better manage the company? 201