Cool-Ice makes popsicles in two flavors, chocolate, and strawberry. Cool-Ice sells these popsicles to various outlets including convenience stores, fairs and schools for fund-raisers and in bulk on the internet. Towards the year end Cool-Ice is preparing its budget for the month of December. These popsicles are hand-made with highest quality, mostly out of sugar and flavors and attached to wooden sticks. Expected sales are based on their historical selling trend.

Other information for the month of December follows.

	Input prices
Direct materials
Sugar & flavors	$0.50 per kilogram (kg)
Sticks	$0.30 each
Direct manufacturing labour	$8 per direct manufacturing labour-hour

Input quantities per unit of output

	Chocolate	Strawberry
Direct materials
Sugar & flavors	0.25 kg	0.5 kg
Sticks	1	1
Direct manufacturing labour-hours (DMLH)	0.2 hour	0.25 hour
Set-up hours per batch	0.08 hour	0.09 hour
Inventory information, direct materials
	Sugar& flavors	Sticks
Beginning inventory	125 kg	350
Target ending inventory	240 kg	480
Cost of beginning inventory	$64	$105

Cool-Ice accounts for direct materials using a FIFO cost flow assumption.

Sales and inventory information, finished goods

	Chocolate	Strawberry
Expected sales in units	3000	1800
Selling price	$3	$4
Target ending inventory in units	300	180
Beginning inventory in units	200	150
Beginning inventory in dollars	$500	$474

Cool-Ice uses a FIFO cost flow assumption for finished goods inventory.

All the popsicles are made in batches of 10. Cool-Ice incurs manufacturing overhead costs, and marketing and general administration costs, but customers pay for shipping. Other than manufacturing labour costs, monthly processing costs are very small. Cool-Ice uses activity-based costing and has classified all overhead costs for the month of December as shown in the following chart:

Cost type	Denominator activity	Rate
Manufacturing:
Set-up	Set-up hours	$20 per set-up hr
Processing	Direct manufacturing labour-hours (DMLH)	$1.70 per DMLH
Non-manufacturing:
Marketing and general	Sales revenue	10%
administration

REQUIRED

PART A

1. Prepare each of the following budget for December:

1. revenues budget
2. production budget in units
3. direct materials usage budget and direct materials purchases budget
4. direct manufacturing labour cost budget
5. manufacturing overhead cost budgets for processing and set-up activities
6. budgeted unit cost of ending finished goods inventory and ending inventories budget
7. cost of goods sold budget

marketing and general administration costs budget