Bombera Ltd operates at capacity and makes glass-topped dining tables and wooden chairs, which are then typically sold as sets of four chairs with one table. However, some customers purchase replacement or extra chairs, and others buy some chairs or a table only, so the sales mix is not exactly 4:1. Bombera Ltd is planning its annual budget for the financial year 2018. Information for 2018 follows:

Questions: (Please answers all the questions and provide the detailed calculation)

1) Prepare the direct materials usage budget and the direct materials purchases budget.

2) Use the direct materials usage budget to find the budgeted allocation rate for materials-handling costs.

3) Prepare the direct manufacturing labour cost budget

4) Prepare the manufacturing overhead cost budget for materials handling, set-up and processing.

5) Prepare the budgeted unit cost of finished good (16.5 marks) and ending inventories budget

6) Prepare the cost of goods sold budget.

7) Prepare the non-manufacturing overhead costs budget for marketing and distribution.

8) Prepare a budgeted income statement (ignore income taxes).

9) Compare the budgeted unit cost of a chair to its budgeted selling price. Why might Bombera Ltd continue to sell the chairs for only $70?

Input prices $5.30 per board metre $11.5 per sheet $14 per direct manufacturing labour-hour Input quantities per unit of output Chairs Tables 1.2 board metres 1.7 board metres 2 sheets 3 hours 6 hours 2 MH 5 MH Inventory information, direct materials Wood Glass 27 200 board metres 8 700 sheets 29 360 board metres 9 500 sheets Direct materials Wood Glass Direct manufacturing labour Direct materials Wood Glass Direct manufacturing labour Machine-hours (MH) Beginning inventory Target ending inventory Sales and inventory information, finished goods Chairs Tables Expected sales in units 172 000 45 000 Selling price $70 $900 Target ending inventory in units 8 400 2 050 Beginning inventory in units 7 500 2 150 Chairs are manufactured in batches of 500 and tables are manufactured in batches of 50. It takes three hours to set up for a batch of chairs and two hours to set up for a batch of tables. Bombera Ltd uses activity-based costing and has classified all overhead costs as shown in the table below: Budgeted Budgeted variable fixed Cost driver/allocation base Cost type Manufacturing: Materials Number of board metres handling $342 840 $600 000 used Set-up 97 000 300 740 Set-up hours Processing 789 250 5 900 000 Machine-hours Non- manufacturing: Marketing 4 500 000 2011 200 54 000 Sales revenue Number of deliveries Distribution 380 000 Delivery trucks transport units sold in delivery sizes of 500 chairs or 500 tables