Adias Pty Ltd manufactures shower towels for two local football teams in Sydney. The towels are made

from fabric with a logo designed by Bayswater Logo design company. The teams are as follows:

Vida Glow: with black towels and the Vida Glow logo

Champion: with blue towels and the Champion logo

Also, the blue towels are slightly larger than the black towels.

The budgeted direct-cost inputs for each towel in 2019 are as follows:

Vida Glow shower towel Champion shower towel

Black fabric (yard) 5 - ---

Blue fabric(yard) --- 6

Logo patches for each towel 1 1

Direct manufacturing labor hours 4 5

Inventory at stock for Adias in March 2019 are as follows:

Vida Glow shower towel Champion shower towel

01/03/2019 31/03/2019 01/03/2019 31/03/2019

Black fabric (yard) 40 30 --- ---

Blue fabric(yard) 0 --- 20 20

Logo patches for each

towel

50 30 65 30

Unit cost data for direct-cost inputs pertaining to February 2019 and March 2019 are as follows:

Feb2019 (actual) March 2019 (budgeted)

Black fabric (per yard) $10 $11

Blue fabric(per yard) 14 13

Logo patches for Vida Glow (Per patch) 8 8

Logo for Champion (Per patch) 7 9

Manufacturing labor cost per hour 27 28

Manufacturing overhead is allocated on the basis of budgeted direct manufacturing labor-hours per

blanket. The budgeted variable manufacturing overhead rate for March 2019 is $17 per direct

manufacturing labor-hour. The budgeted fixed manufacturing overhead for March 2019 is $17,625. Both

variable and fixed manufacturing overhead costs are allocated to each unit of finished goods.

Finished-goods inventory for March 2019 are as following,

Vida Glow shower towel Champion shower towel

Beginning inventory in units 14 20

Beginning inventory in dollars $1960 $ 2945

Target ending inventory in units 24 30

Budgeted sales for March 2019 are 150 units of the Vida Glow towels and 205 units of the Champion

shower towel. The budgeted selling prices per unit in March 2019 are $315 for the Vida Glow towels and

$385 for the Champion towels. Assume the following in your answer:

Work-in-process inventories are negligible and ignored.

Direct materials inventory and finished-goods inventory are costed using the FIFO method.

Unit costs of direct materials purchased and finished goods are constant in March 2017.

You need to:

1. Prepare the following budgets for March 2019:

a. Revenues budget

b. Production budget in units

c. Direct material usage budget and direct materials purchases budget

d. Direct manufacturing labor costs budget

e. Manufacturing overhead costs budget

f. Ending inventories budget (direct materials and finished goods)

g. Cost of goods sold budget

2.Suppose Adias Pty Ltd decides to incorporate continuous improvement into its budgeting process.

Describe two areas where it could incorporate continuous improvement into the budget schedules in

requirement 1.