Part A

Furniture Specialties is a company that make two types of dining tables: Simple and Futuristic. There are two types of direct materials: Pine and Mahogany woods. Direct manufacturing labour workers are hired on an hourly basis; no overtime is worked. In terms of manufacturing overhead costs, there are two manufacturing overhead cost pools and two cost drivers. The two manufacturing overhead cost pools are manufacturing operations overhead and machine setup overhead. The cost drivers for manufacturing overhead are: direct manufacturing labour-hours for manufacturing operations overhead cost and setup labour-hours for machine setup overhead cost. Nonmanufacturing costs consist of product design, marketing, and distribution costs.

The following data are available for the 2018 budget:

Direct Materials Rate
Pine	$ 9 per meter square (m2)
Mahogany	$13 per meter square (m2)
Direct Manufacturing labour rate	$25 per hour

	Quantity of Material for Each Product
	Simple Table	Futuristic Table
Pine	14 m2	14 m2
Mahogany	8 m2	10 m2
Direct Material Labour	6 hours	8 hours

	Products
	Simple Table	Futuristic Table
Expected Sales for 2018 (in units)	55,000	15,000
Selling Price	$ 750	$ 950
Target ending inventory in units	12,000	500
Beginning inventory in units	1,000	500
Beginning inventory in dollars	$ 400,000	$ 275,000

	Direct materials inventory
	Pine	Mahogany
Beginning inventory	85,000 m2	65,000 m2
Target ending inventory	90,000 m2	25,000 m2

Data on Manufacturing Overhead Cost
Manufacturing Operations Overhead cost (in capacity of 350,000 direct manufacturing labour-hours)
Variable manufacturing operation overhead costs (per direct manufacturing labour-hours)
Supplies Indirect manufacturing labour Power (support department costs) Maintenance (support department costs) Total variable manufacturing operation overhead cost	$ 4.50 6.50 7.00 3.50 $ 21.50
Fixed manufacturing operation overhead cost
Depreciation Supervision Power (support department costs) Maintenance (support department costs) Total fixed manufacturing operation overhead cost	$ 1,400,000 420,000 725,000 430,000 $ 2,975,000

Machine Setup Overhead Costs (in capacity of 15,150 setup labour-hours)
Variable machine setup overhead cost (per setup labour-hours)
Supplies Indirect manufacturing labour Power (support department) Total variable machine setup overhead cost	$ 25 55 10 $ 90
Fixed machine setup overhead cost
Depreciation Supervision Power (Support department cost) Total fixed machine setup overhead cost	$ 605,000 1,040,000 21,500 $ 1,666,500
0.2 hour of setup labour-hour is allocated to make one unit of simple table and 0.3 hour of setup labour-hour is allocated for futuristic table

Non-manufacturing Cost
Product Design Cost (fixed)	$ 1,100,000
Marketing Cost Fixed marketing cost Variable marketing cost is equals the 7.5% of revenues	$ 1,350,000
Distribution Cost Fixed distribution cost Variable distribution cost is $2 per cubic feet of table sold and shipped Simple table 20 cubic feet per table sold and shipped Futuristic table 25 cubic feet per table sold and shipped	$ 1,700,000

Required:

Based on the above information provided by the various department managers, prepare the following budgets:

A. Sales/Revenue Budget (3 marks)