Tyva makes a very popular undyed cloth sandal in one style, but in Regular and Deluxe. The Regular sandals have cloth soles and the Deluxe sandals have cloth-covered wooden soles. Tyva is preparing its budget for June 2015 andhas estimated sales based on past experience. Othe rinformation for the month of June follows:

Input prices

Direct Materials Cloth - $5.25 per yard, Wood - $7.50 per board foot

Direct Manufacturing Labor %15 per direct manufacturing labor hour

Input Quantities per Unit of Output(per pair of sandals)

Direct Materials

Cloth 1.3 yards (Regular) 1.5 yards (Deluxe)

Wood 0 (Regular) 2 b.f. (Deluxe)

Direct Manufacturing labor hours (DMLH) 5 hours (Regular) 7 hours (Deluxe)

Set-up hours per batch 2 hours (Regular) 3 hours (Deluxe)

Inventory Information, direct Materials

Beginning inventory 610 yards (Cloth) 800 b.f. (Wood)

Target ending inventory 386 yards (Cloth) 295 b.f. (Wood)

Cost of beginning inventory $3,219 (Cloth) $6,060 (Wood)

Tyva accounts for direct materials using a FIFO cost flow assumption

Sales and Inventory Information, Finished Goods

Expected sales in units (pairs of sandals) 2,000 (Regular) 3,000 ( deluxe)

Selling price $120 (Regular) $195 (Deluxe)

Target ending inventory in units 400 (Regular) 600 (Deluxe)

Beginning inventory in units 250 (Regular) 650 (Deluxe)

beginning inventory in dollars $23,250 (regular) $92,625 (deluxe)

Tyvo uses a FIFO cost flow assumptionfor finished goods inventory.

All the sandals are made in batches of 50 pairs of sandals. tyva incurs manufacturing overhead costs, marketing and general administration, and shipping costs. Besides materials and labor, manufacturing costs include setup, processing, and inspection costs.Tyva ships 40 pairs of sandals per shipment. Tyva uses activity based costing and has classified alloverhead costs for the month of June as shown in the following chart.

Cost Type: (Manufacturing Setup) Denominator Activity (set up hours) Rate $18 per set up hour

Cost Type: (Processing) Denominator Activity (Direct Manufacturing Labor hours) Rate $1.80 per DMLH

Cost Type: (Inspection) Denominator Activity (Number of pairs of sandals) Rate $1.35 per pair

Cost Type (Non Manufacturing) -marketing & general adminstration Denominator activity (Sales revenue) Rate 8%

Cost Type (Shipping) Denominator Activity (# of Shipments) Rate $15 per shipment

1. Prepare each of the following for June:

a. Revenues Budget b. Production budget in units c.Direct Material usage budgetand direct material purchases budget in both units and dollar; round to dollars

d. Direct Manufacturing labor cost budget

e. Manufacturing overhead cost budgets for setup, processing, and inspection activities

f. Budgeted unit cost of ending finished goods inventory and ending inventories budget

g. Cost of goods sold budget

h. Marketing and general administration and shipping costs budget

Tyva's balance sheet for May 31 follows.

Assets

Cash $9,435

Accounts Receivable $324,000

Less: Allowance for bad debts $16,200

Total $307,800

Inventories

Direct Materials 9,279

Finished Goods 115,875

Fixed Assets $870,000

Less Accumulated Depreciation $136,335

Total Assets $1,176,054

Liabilities and Equities

Accounts Payable $15,600

Taxes payable $10,800

Interest Payable $750

Long Term Debt $150,000

Common Stock $300,000

Retained Earnings $698,904

Total Liabilities and equity $1,176,054

Use the balance sheet and the following information to prepare a cash budget for Tyva for June. Round to dollars.

-All sales are on account: 60% are collected in the month of the sale, 38% are collected the following month, and 2 % are never collected and written off as bad debts.

-All purchases of materials are on account. Tyva pays for 80% of purchases in the month of purchase and 20% in the following month.

-All other costs are paid in the month incurred, including the declaration and paymentof a $15,000 cash dividend in June.

-Tyva is making monthly interest payments of .5% (6% per year) on a $150,000long term loan.

-Tyva plans to pay the $10,800 of taxes owed as of May 31 in the month of June. Income tax expense for June is zero.

-30% of processing, setup, and inspection costs and 10% of marketing and general administration and shipping costs and depreciation.

3. Prepare a budgeted income statement for June and a budgeted balance sheet for Tyva as of June 30, 2015.