Michaels Glasswares (MG) manufactures two types of wine glasses: regular and jumbo. MG product is sold to wholesalers, specialty retailers, and direct to customers via the Internet. The holidays are approaching and MG is preparing its budget for the month of December. The owners of this business will use a comprehensive budgeting system to facilitate planning and decision making for MDC.

The glasses are hand-blown and painted. Direct materials consist primarily of glass and paint. The uniqueness of the products allows MG to earn a generous markup on their product.

Other information for the month of December follows:

The purchasing department estimates that the direct materials purchased in December will cost: Glass $5.00 per ounce Paint $3.00 per unit

The human resources department informs you that the direct manufacturing labor cost per hour will be $12.00 for December; overtime $24 is paid double the straight-time rate.

The manufacturing department provides you with the following information:

Input Quantities per Unit of Output:

	Regular	Jumbo
Direct Materials:
Glass	0.25 ounces	0.5 ounces
Paint	1 unit	1 unit
Direct Manufacturing Labor Hours	0.25 hours	0.3 hours
Setup Hours per Batch	0.8 hours	0.9 hours

Inventory Information, Direct Materials:

	Glass	Paint
Beginning Inventory	240 ounces	480 units
Target Ending Inventory	130 ounces	350 units
Cost of Beginning Inventory	$1,224	$1,392

MG accounts for direct materials using a FIFO cost assumption.

Sales and Inventory Information Finished Goods

	Regular	Jumbo
Selling Price	$30	$40
Forecasted Sales in units (December)	4,000	2,500
Forecasted Sales in units (January)	3,000	2,500
Beginning Inventory in Dollars	$2,700	$1,980

MG uses a FIFO cost assumption for finished goods inventories. Targeted ending finished goods inventory in units each month is estimated at 10% of the next months forecasted sales units.

All of the glasses are made in batches of 10. MG incurs manufacturing overhead costs and marketing and general administration costs, but customers pay for shipping and distribution costs. MG uses activity based costing and has classified all overhead costs for the month of December as follows:

Cost Type	Denominator Activity	Rate
Manufacturing:
Setup	Setup hours	$20 per setup hour
Processing	Direct Manufacturing Labor Hours (DMLH)	$1.70 per DMLH
Nonmanufacturing:
Marketing and General Admin	Sales Revenue	10%

Assignment:

1. (40 points) Prepare each of the following budgets for December:
   1. Revenues budget
   2. Production budget in units
   3. Direct materials usage budget and direct materials purchases budget
   4. Direct manufacturing labor cost budget
   5. Manufacturing overhead cost budgets for processing and setup activities
   6. Budgeted unit cost of ending finished goods inventory and ending inventories budget
   7. Cost of goods sold budget
   8. Non-manufacturing costs budget