Warsaw Ltd operates at capacity and makes glass-topped dining tables and wooden chairs, which are then typically sold as sets of four chairs with one table. However, some customers purchase replacement or extra chairs, and others buy some chairs or a table only, so the sales mix is not exactly 4:1. Warsaw Ltd is planning its annual budget for the financial year 2020. Information for 2020 is as follows:

Input prices

Direct materials

Wood$5.30 per board metre

Glass$11.5 per sheet

$14 per direct manufacturing labourDirect manufacturing labourhour

Input quantities per unit of output

ChairsTables

Direct materials

Wood1.2 board metres1.7 board metres

Glass ? 2 sheets

Direct manufacturing

labour 3 hours 6 hours

Machine-hours (MH) 2 MH 5 MH

Inventory information, direct materials

Wood Glass

Beginning inventory 27 200 board metres 8 700 sheets

Target ending inventory 29 360 board metres 9 500 sheets

Sales and inventory information, finished goods

Chairs Tables

Expected sales in units 172 000 45 000

Selling price $70 $900

Target ending inventory in units 8 400 2 050

Beginning inventory in units 7 500 2 150

Chairs are manufactured in batches of 500 and tables are manufactured in batches of 50. It takes three hours to set up for a batch of chairs and two hours to set up for a batch of tables. Warsaw Ltd uses activity-based costing and has classified all overhead costs as shown in the table below:

Budgeted Budgeted Cost type variable fixed Cost driver/allocation base Manufacturing: Materials handling $342 840 $600 000 Number of board metres used Set-up 97 000 300 740 Set-up hours Processing 789 250 5 900 000 Machine-hours Non- manufacturing: Marketing 2 011 200 4 500 000 Sales revenue Distribution 54 000 380 000 Number of deliveries