Mini-Cases 6-39 Comprehensive budgeting problem; activity-based costing, operating and financial budgets. (LO 123 5) Grant Shew is the product manager at Yummi-Lik. Yummi-Lik sells really big lollipops in two sizes, large and giant lollipops to convenience stores, at fairs, and to schools for fundraisers, as well as a bulk channel on the internet. The lollipops are handmade, mostly out of sugar, and attached to wooden sticks. Grant is preparing the sales budget for the summer, knowing a successful sales season will have a big impact on his performance review. Expected sales are based on past experience. Other information for the month of June follows: Yummi-Lik accounts for direct materials using a FIFO cost flow assumption. Sales and Inventory Information, Finished Goods Yummi-Lik uses a FIFO cost flow assumption for finished goods inventory. All the lollipops are made in batches of 10. Yummi-Lik 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 low. Yummi-Lik uses ABC and has classified all overhead costs for the month of June as shown in the following chart: Grant knows that 80% of sales are on account, of which half are collected in the month of the sale, 49% are collected the following month, and 1% are never collected and written off as bad debts, which has an impact on net revenues. In addition to this, all purchases of materials are on account. Yummi-Lik pays for 70% of purchases in the month of purchase and 30% in the following month. However, all other costs are paid in the month incurred. Knowing this, Grant has to create 2. A cash budget for Yummi-Lik for June 3. A budgeted income statement for June and a budgeted balance sheet for Yummi-Lik as of June 30 The following information is necessary: i. Yummi-Lik's balance sheet for May 31 follows. Use it and the following information to prepare a cash budget for Yummi-Lik for June. ii. Yummi-Lik is making monthly interest payments of 1% (12\% per year) on a $20,000 long-term loan. iii. Yummi-Lik plans to pay the $500 of taxes owed as of May 31 in the month of June. Income tax expense for June is zero. iv. 40% of processing and setup costs, and 30% of marketing and general administration costs, are depreciation. Mini-Cases 6-39 Comprehensive budgeting problem; activity-based costing, operating and financial budgets. (LO 123 5) Grant Shew is the product manager at Yummi-Lik. Yummi-Lik sells really big lollipops in two sizes, large and giant lollipops to convenience stores, at fairs, and to schools for fundraisers, as well as a bulk channel on the internet. The lollipops are handmade, mostly out of sugar, and attached to wooden sticks. Grant is preparing the sales budget for the summer, knowing a successful sales season will have a big impact on his performance review. Expected sales are based on past experience. Other information for the month of June follows: Yummi-Lik accounts for direct materials using a FIFO cost flow assumption. Sales and Inventory Information, Finished Goods Yummi-Lik uses a FIFO cost flow assumption for finished goods inventory. All the lollipops are made in batches of 10. Yummi-Lik 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 low. Yummi-Lik uses ABC and has classified all overhead costs for the month of June as shown in the following chart: Grant knows that 80% of sales are on account, of which half are collected in the month of the sale, 49% are collected the following month, and 1% are never collected and written off as bad debts, which has an impact on net revenues. In addition to this, all purchases of materials are on account. Yummi-Lik pays for 70% of purchases in the month of purchase and 30% in the following month. However, all other costs are paid in the month incurred. Knowing this, Grant has to create 2. A cash budget for Yummi-Lik for June 3. A budgeted income statement for June and a budgeted balance sheet for Yummi-Lik as of June 30 The following information is necessary: i. Yummi-Lik's balance sheet for May 31 follows. Use it and the following information to prepare a cash budget for Yummi-Lik for June. ii. Yummi-Lik is making monthly interest payments of 1% (12\% per year) on a $20,000 long-term loan. iii. Yummi-Lik plans to pay the $500 of taxes owed as of May 31 in the month of June. Income tax expense for June is zero. iv. 40% of processing and setup costs, and 30% of marketing and general administration costs, are depreciation