Kombucha Kings produce two types of Kombucha, Lemon & ginger and Raspberry. The barrels require significant maintenance between batches and can be used only a few times.

The company currently uses a traditional costing system with total manufacturing overhead of $375 000 being applied to the two products according to their proportion of direct labour dollars. Assume that the following production and cost information for the most recent years:

Lemon & gingerRaspberry

Number of bottles produced200 00025 000

Unit cost information

Direct materials$2.00$4.00

Direct Labour$1.00$2.00

Manufacturing overhead??

The company has conducted ABC analysis and traced the manufacturing overhead costs to four (4) activity pools, with the followingcost drivers(see table below):

ActivityCost pools Total cost Amount of cost drivers

Purchasing and receiving $90 000 450 000 kilograms of raw materials

Setup for production$100 000400 number of batches

Fermenting and aging $80 000200 000 number of fermentation days

Quality control $105 000 20 000 number of inspections

Total$375 000

Below is the activity related information has been collected for each of the two products:

Lemon & ginger Raspbery

Kilograms of raw materials 400 00050 000

Number of batches 200200

Number of fermentation days30 000 170 000

Number of inspections2000180 000

Required

1 make a revenue budget for the coming month assuming it is 30 days long and the business is open 7 days per week. Show all workings.

2.If 60% of each month's sales revenue is collected in the month the sale is made and the remainder is collected in the following month. How much cash will you expected to be collected in the coming month. What additional assumptions will you need to make?

3.Identify three (3) possible ways the owner could increase total revenues. Discuss the pros and cons for each of your ideas.