Pet Luggage uses an activity-based costing system and classifies overhead into three activity pools: Setup, Processing, and Inspection Activity rates for these activities are $100 per setup-hour, $5 per machine-hour, and $16 per inspection-hour, respectively. Other information follows: Pet Luggage Company makes two pet carriers, the Cat-allac and the Dog-eriffic. They are both made of plastic with metal doors, but the Cat-allac is smaller. Information for the two products for the month of April is given in the following tables: (Click the icon to view the information for the two products.) Pet Luggage accounts for direct materials using a FIFO cost-flow assumption. (Click the icon to view the account information.) Direct materials Plastic $ 4 per pound Metal $ 3 per pound Direct manufacturing labor $ 10 per direct manufacturing labor hour Input Quantities per Unit of Output Direct materials Plastic Metal Cat-allac Dog-eriffic 3 pounds 5 pound 0.5 pounds Sales and Inventory Information, Finished Goods Cat-allac Dog-eriffic Direct manufacturing labor-hours (DMLH) Machine-hours (MH) 3 hours 10 MH 1 pound 5 hours 18 MH Expected sales in units 500 215 Inventory Information, Direct Materials Selling price $ 215 $ 320 Target ending inventory in units 35 15 Plastic Metal Beginning inventory in units 15 30 Beginning inventory 240 pounds 70 pound Beginning inventory in dollars $ 1,500 $ 5,580 Target ending inventory 410 pounds 60 pound Pet Luggage uses a FIFO cost-flow assumption for finished-goods inventory. Cost of beginning inventory $ 936 $ 203 Prepare the following for April: Cost Driver Information 1. Revenues budget Number of units per batch Cat-allac 20 Dog-errific 8 2. Production budget in units 3. 4. Setup time per batch 1.50 hours 2.00 hours 5. Direct material usage budget and direct material purchases budget Direct manufacturing labor cost budget Manufacturing overhead cost budgets for each of the three activities Inspection time per batch 0.5 hours 0.6 hour 6. Budgeted unit cost of ending finished goods Inventory and ending inventories budget f necessary, round up to calculate number of batches. Nonmanufacturing fixed costs for March equal $32,000, half of which are salaries. Salaries are expected to increase 5% in April. Other nonmanufacturing fixed costs vill remain the same. The only variable nonmanufacturing cost is sales commission, equal to 1% of sales revenue. 7. Cost of goods sold budget 8. Nonmanufacturing costs budget 9. Budgeted income statement (ignore income taxes) 10. How does preparing the budget help Pet Luggage's management team better manage the company? Requirement 1. Prepare the revenues budget. Revenues Budget For the Month of April Direct Material Usage Budget in Quantity and Dollars Units Cat-allac 500 $ Selling price 215 Total revenues Physical Units Budget Dog-eriffic 215 320 Direct materials required for Total Cat-allac For the Month of April Material Plastic Metal Total Dog-errific Total quantity of direct material to be used Production Budget For the Month of April Cat-allac Dog-eriffic Budgeted units sales Add target ending finished goods inventory Total required units Deduct beginning finished goods inventory Units of finished goods to be produced lbs. lbs. lbs. lbs. lbs. lbs. For the Month of April Materials Plastic Metal Total Physical Units Budget To be used in production 4,080 lbs. 480 lbs. 410 40 Add target ending inventory Total requirement lbs. lbs. lbs. lbs. 280 50 Deduct beginning inventory lbs. lbs. Purchases to be made lbs. lbs. Cost Budget Available from beginning direct materials inventory (under a FIFO cost-flow assumption) Plastic Metal To be purchased this period Plastic Metal Direct materials to be used this period