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PART 1 Plaxico, 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. Advocate's management is planning its annual budget for fiscal year 2020. Here is information for 2020: Input Prices Direct materials Plastic $0.30 per ounce Bristles $0.75 per bunch Direct manufacturing labor $ 18 per direct manufacturing labor-hour Input Quantities per Unit of Output Combs Brushes Direct materials Plastic 5 ounces 8 ounces Bristles 16 bunches Direct manufacturing labor 0.05 hours 0.2 hours Machine-hours (MH) 0.025 MH 0.1 MH Rectang Inventory Information, Direct Materials Plastic Bristles Beginning inventory 1,600 ounces 1,820 bunches Target ending inventory 1,766 ounces 2,272 bunches Cost of beginning inventory $456 $1,419 Plaxico accounts for direct materials using a FIFO cost flow. Sales and Inventory Information, Finished Goods Combs Expected sales in units 12,000 Selling price $ 9 Target ending inventory in units 1,200 Beginning inventory in units 600 Beginning inventory in dollars $ 2,700 Brushes 14,000 $ 30 1,400 1,200 $27,180 Plaxico 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. Advocate uses activity-based costing and has classified all overhead costs as shown in the following table. Budgeted fixed overhead costs vary with capacity. Plaxico 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 Budgeted Variable Budgeted Fixed Cost Driver/Allocation Base Cost Type Manufacturing Materials handling Setup Processing Inspection Nonmanufacturing Marketing Distribution $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 $21,150 0 $90,000 1,170 Sales revenue Number of deliveries Delivery trucks transport units sold in delivery sizes of 1,000 combs or 1,000 brushes. Do the following for the year 2018: Required: 1. Prepare the revenues budget. 2. Use the revenues budget to: a. Find the budgeted allocation rate for marketing costs. Rectan 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 budget 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. PART 1 Plaxico, 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. Advocate's management is planning its annual budget for fiscal year 2020. Here is information for 2020: Input Prices Direct materials Plastic $0.30 per ounce Bristles $0.75 per bunch Direct manufacturing labor $ 18 per direct manufacturing labor-hour Input Quantities per Unit of Output Combs Brushes Direct materials Plastic 5 ounces 8 ounces Bristles 16 bunches Direct manufacturing labor 0.05 hours 0.2 hours Machine-hours (MH) 0.025 MH 0.1 MH Rectang Inventory Information, Direct Materials Plastic Bristles Beginning inventory 1,600 ounces 1,820 bunches Target ending inventory 1,766 ounces 2,272 bunches Cost of beginning inventory $456 $1,419 Plaxico accounts for direct materials using a FIFO cost flow. Sales and Inventory Information, Finished Goods Combs Expected sales in units 12,000 Selling price $ 9 Target ending inventory in units 1,200 Beginning inventory in units 600 Beginning inventory in dollars $ 2,700 Brushes 14,000 $ 30 1,400 1,200 $27,180 Plaxico 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. Advocate uses activity-based costing and has classified all overhead costs as shown in the following table. Budgeted fixed overhead costs vary with capacity. Plaxico 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 Budgeted Variable Budgeted Fixed Cost Driver/Allocation Base Cost Type Manufacturing Materials handling Setup Processing Inspection Nonmanufacturing Marketing Distribution $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 $21,150 0 $90,000 1,170 Sales revenue Number of deliveries Delivery trucks transport units sold in delivery sizes of 1,000 combs or 1,000 brushes. Do the following for the year 2018: Required: 1. Prepare the revenues budget. 2. Use the revenues budget to: a. Find the budgeted allocation rate for marketing costs. Rectan 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 budget 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
