Specifically, the following critical elements must be addressed: III. Main Costing Systems Activity-Based Costing vs. Process Costing a) Identify the cost allocation system that would benefit this company most. Justify your response. b) Does this cost allocation system meet management planning and control goals? Explain. c) What are the ethical implications that should be considered with this cost allocation system? d) Describe the ethical implications of direct costs versus indirect costs. What considerations should be made when selecting one of these two?

ACC 207 MDE Manufacturing Budget: Bird Feeder

I. Sales and Manufacturing Expenses: Budget and Actual(2014)

You will use this table to complete Milestones One and Two.

	Budget ($)	Actual ($)
Sales	1,050,000	991,700
Expenses
Materials Cedar	225,000	248,160
Materials Plastic	37,500	37,741
Factory Worker Labor	300,000	332,760
Materials Indirect	3,000	2,585
Factory Depreciation	78,000	78,000
Factory Utilities	12,000	12,000
Factory Maintenance and Repairs	5,000	4,500
Shipping ($2.25/each)	112,500	105,750
Sales Commissions ($2.00/unit sold)	100,000	94,000
Office Rent	12,000	12,000
Advertising	20,000	20,000
Liability insurance	5,000	5,000
Office Depreciation	1,000	1,000
Office Salaries	48,000	48,000
Total Expenses	959,000	1,001,496

II. Contribution Margin: Static Budget and Actual Results (2014)

You will use this table to complete Milestone Two.

	Actual Results	Static Budget Amount
Units Sold	47,000	50,000
Revenues ($)	991,700	1,050,000
Manufacturing Costs ($)
Variable	621,246	565,500
Fixed	94,500	95,000
Gross Margin	275,954	389,500

III. Standard Variable Manufacturing Costs (2014)

You will use this table to complete Milestone Two.

	Static Budget Costs	Standard Input
Direct Materials: Cedar	225,000	3.0 ft/unit
Direct Materials: Plastic	37,500	1.0 ft/unit
Direct Manufacturing Labor	300,000	0.5 hrs/unit
Variable Manufacturing Overhead	3,000	0.3 ft/unit

IV. Actual Variable Manufacturing Costs (2014)

You will use this table to complete Milestone Two.

	Actual Costs	Actual Input
Direct Materials: Cedar	248,160	3.2 ft/unit
Direct Materials: Plastic	37,741	1.1 ft/unit
Direct Manufacturing: Labor ($)	332,760	11.80/hr
Variable Manufacturing Overhead	2,585	0.2 ft/unit

ANSWERS FOR MILESTONE 1& 2

						Development of Flexible Budget - Calculations
						Budgeted Cost per Feet/Hour				Static Budget Cost					Static Budget Units
Revenues
Variable Costs
DM-Plastic						$ 1.50				225,000					50,000
DM-Cedar						$ 0.75				37,500					50,000
Direct Manuf. Labor						$ 12.00				300,000					50,000
Variable Manuf. Overhead						$ 0.20				3,000					50,000
Total Variable Manufacturing Costs										565,500
Fixed Manufacturing Overhead
Total Manufacturing Costs
Gross Margin
			Development of Flexible Budget - Calculations
			Budgeted Cost per Feet/Hour				Static Budget Cost					Static Budget Units				Budgeted Unit				Actual Volume					Flexible Budget
																Amounts									Amount
Revenues																$ 21.00				47,000					$987,000
Variable Costs
DM-Plastic																4.50				47,000					211,500
DM-Cedar																0.75				47,000					35,250
Direct Manuf. Labor																6.00				47,000					282,000
Variable Manuf. Overhead																0.06				47,000					2,820
Total Variable Manufacturing Costs																11.31									531,570
Fixed Manufacturing Overhead																									95,000
Total Manufacturing Costs																									626,570
Gross Margin																									$360,430
Milestone One, Part II
Use Table I on the MDE Manufacturing Budget to complete your calculations.
														Totals									Totals
														Budget									Actual
	Sales Price per Unit													$ 21.00									$ 21.00
	Variable Costs
		Materials - Cedar												225,000									248,160
		Materials - Plastic												37,500									37,741
		Factory Worker Labor												300,000									332,760
		Materials - Indirect												3,000									2,585
		Shipping ($2.25/ea)												112,500									105,750
		Sales Commissions ($2/unit sold)												100,000									94,000
														778,000									820,996
	Variable Cost per Unit							778,000 / 50,000						$15.56					820,996/47,000				$ 17.47
	Contribution Margin													$ 5.44									$3.63

Using Budgeted Amounts
Breakeven Point -			181,000		33272 units			49,697 units
		$5.44
Using Actual Amounts			180,500			52,450 units
+ 10,000 profit		190,500
Using actual amounts
+ 10,000 profit

New Contribution Margin		$4.05
Current Variable Costs		$17.47
New Sales Price		$21.52

Development of Price and Efficiency Variances - Calculations

		Actual Ounces per Unit	Actual Units	Actual Ounces Used	Actual Cost	Actual Cost per Unit
DM-Plastic		3	47,000	150,400	248,160	$ 1.65
DM-Cedar		1	47,000	51,700	37,741	$ 0.73
		Actual Labor Cost per Hour	Actual Labor Costs	Actual Labor Hours	Actual Units	Actual Labor Hours per Unit
Direct Manuf. Labor		$ 11.80	$ 332,760	28,200	47,000	0.60

Direct Material Plastic ($22,560) U price variance

($14,100) U efficiency variance

Direct Material Cedar $1034 F Price variance.

($3525) U efficiency variance

Direct Manufacturing Labor $5640 F Price Variance

($56,400) U Efficiency Variance

Variable Manufacturing Overhead ($235 ) U Spending Variance

$470 F Efficiency Variance