YourMat Inc. manufactures green yoga mats, using eco-friendly rubber and pigment as direct

materials. One mat is budgeted to use 36 ounces of rubber at a cost of $2 per ounce and 0.8 pints

of pigment at a cost of $6 per pint. All other materials are indirect. At the beginning of the year

YourMat has an inventory of 458,000 ounces of rubber at a cost of $916,000 and 4,000 pints of

pigment at a cost of $24,000. Target ending inventory of rubber and pigment is zero.

YourMat green mats are very popular and demand is high, but because of capacity constraints

the firm will produce only 200,000 green mats per year. The budgeted selling price is $200 each.

There are no mats in beginning inventory. Target ending inventory of mats is also zero.

YourMat makes mats in a process that is highly manual, but uses a machine to pigment the

rubber. Thus, overhead costs are accumulated in two cost pools?one for finishing and the other

for pigmenting. Finishing overhead is allocated to products based on direct manufacturing laborhours

(DMLH). Pigmenting overhead is allocated to products based on machine-hours (MH).

There is no direct manufacturing labor cost for coloring. YourMat budgets 6.2 direct

manufacturing labor-hours to produce a mat at a budgeted rate of $13 per hour. It budgets 0.2

machine-hours to color each mat in the pigmenting process.

The following table presents the budgeted overhead costs for the pigmenting and finishing cost

pools:

Pigmenting Finishing (based on 40,000 MI-l) (based on 1,240,000 DMLH) Variable costs Indirect materials $0 $1,540,000 Maintenance 182,222 554,000 Utilities 209,722 289,000 Fixed costs Indirect labor 9,639 170,000 Depreciation 58,333 27,400 Other 20 083 581 600 Total budgeted costs $480,000 $3,162,000 Required: 1. Prepare a direct materials usage budget in both units and dollars. Calculate the budgeted overhead allocation rates for pigmenting and nishing. Calculate the budgeted unit cost of a green yoga mat for the year. Prepare a revenues budget for green yoga mats for the year, assuming YourMat sells (a) 200,000 or (b) 185,000 green mats (that is, at two different sales levels). Calculate the budgeted cost of goods sold for green mats under each sales assumption- Find the budgeted gross margin for green yoga mats under each sales assumption- What actions might you take as a manager to improve profitability if sales drop to 185,000 green mats? 8. How might top management at YourMat use the budget developed in requirements 16 to better manage the company? 5'5\"!\" 995"