Yummy-Pop makes really big lollipops in two sizes, large and giant. Yummy-Pop sells these lollipops to convenience stores, fairs,

schools for fundraisers and in bulk on the internet. Summer is approaching and Yummy-Pop is preparing its budget for the month

of December. The lollipops are hand-made, mostly out of sugar, and attached to wooden sticks. Expected sales are based on past

experience.

Other information for the month of December follows.

Input prices

Direct materials

Sugar $0.50 per kilogram (kg)

Sticks $0.30 each

Direct manufacturing labour $8 per direct manufacturing labour-hour

Input quantities per unit of output

Large Giant

Direct materials

Sugar 0.25 kg 0.5 kg

Sticks 1 1

Direct manufacturing labour-hours (DMLH) 0.2 hour 0.25 hour

Set-up hours per batch 0.08 hour 0.09 hour

Inventory information, direct materials

Sugar Sticks

Beginning inventory 125 kg 350

Target ending inventory 240 kg 480

Cost of beginning inventory $64 $105

Yummy-Pop accounts for direct materials using a FIFO cost flow assumption.

Sales and inventory information, finished goods

Large Giant

Expected sales in units 3000 1800

Selling price $3 $4

Target ending inventory in units 300 180

Beginning inventory in units 200 150

Beginning inventory in dollars $500 $474

Yummy-Pop uses a FIFO cost flow assumption for finished goods inventory.

All the lollipops are made in batches of 10. Yummy-Pop incurs manufacturing overhead costs, and marketing and general

administration costs, but customers pay for shipping. Other than manufacturing labour costs, monthly processing costs are very small.

Yummy-Pop uses activity-based costing and has classified all overhead costs for the month of December as shown in the following

chart:

Cost type Denominator activity Rate

Manufacturing:

Set-up Set-up hours $20 per set-up hr

Processing Direct manufacturing labour-hours (DMLH) $1.70 per DMLH

Non-manufacturing:

Marketing and general administration Sales revenue 10%

Yummy-Pop Balance sheet as of 30 November

Assets

Cash $587

Accounts receivable $4 800

Less: Allowance for bad debts 96 4 704

Inventories

Direct materials 169

Finished goods 974

Fixed assets $190 000

Less: Accumulated depreciation 55 759 134 241

Total assets $140 675

Liabilities and equity

Accounts payable $696

Taxes payable 500

Interest payable 200

Long-term debt 20 000

Ordinary shares 10 000

Retained earnings 109 279

Total liabilities and equity $140 675

QUSETION: in Excel

Collaborative Learning Problem 10.42 -- Yummy Pop December - Input prices Direct Materials Sugar $ Sticks $ Direct Manufacturing Labour (DMLH) $ Input quantities per unit of output Direct Materials Sugar Sticks Direct Manufacturing Labour Set-up hours per batch Number of units per batch 0.50 per kilogram 0.30 each 8.00 per direct manufacturing hour Large 0.25 1 0.2 0.8 10 Giant 0.5 1 0.25 0.09 Inventory information Sugar Sticks Beginning inventory 125 350 Target ending inventory 240 480 Cost of beginning inventory $ 64.00 $ 105.00 Note: FIFO method of inventory is used Balance Sheet as at 30 November Assets Cash Accounts Receivable Less: Allowance for Bad Debts Inventories Direct Materials Finished Goods Fixed Assets Less: Accumulated Depeciation Total Assets Liabilities and Equity Accounts Payable Taxes Payable Interest Payable Long-term Debt Ordinary Shares Retained Earnings Total Liabilities and Equity 587.00 4,800.00 96.00 4,704.00 169.00 974.00 1,143.00 190,000.00 55,759.00 134,241.00 140,675.00 696.00 500.00 200.00 20,000.00 10,000.00 109,279.00 140,675.00 Overhead costs - activity based costing approach Manufacturing: Set-up set-up hours $ 20.00 Processing DMLH $ 1.70 Non-manufacturing: Marketing and general admin Sales revenue 10% Depreciation % of Processing and Set-up % of Marketing and Gen Admin 40% 30% Cash Collections Credit Sales In month of sale Month following sale Never collected Cash Purchases In month of purchase Month following purchase 70% 30% Interest Rate per month Rate per year 1% 12% 80% 50% 49% 1% Sales and Inventory Information Large Giant Expected sales in units 3000 1800 Selling price $ 3.00 $ 4.00 Target ending inventory 300 180 Beginning inventory in units 200 150 Beginning inventory in dollars $ 500.00 $ 474.00 Note: FIFO method of inventory is used Yummy Pops Revenue Budget for the month of December Units Large Giant Total Selling Price Total Revenue Yummy Pops Production Budget for the month of December Large Budgeted unit sales Add: target ending finished goods inventory Total required units Deduct: beginning finished goods inventory Units of finished goods to be produced Giant Yummy Pops Materials Usage (Quantity) for the month of December Sugar Sticks Sugar Sticks Sugar Sticks Sugar Sticks Direct materials required for Large Giant Total quantity of direct materials to be used Yummy Pops Materials Usage (Cost) for the month of December Total Available from beginning direct materials inventory To be purchased this period Sugar: Sticks: (4 930 - 350) A$0.30 per stick Direct materials to be used this period Yummy Pops Materials Purchases (Quantity) for the month of December Physical Units Budget To be used in production Add: Target ending direct material inventory Total requirements Deduct: beginning direct material inventory Purchases to be made Yummy Pops Materials Purchases (Cost) for the month of December Physical Units Budget Purchases Total Yummy Pops Direct Labour Budget for the month of December Large Output (Units Produced) Direct Labour Total Hours Hourly rate Total Giant Yummy Pops Manufacturing Overhead Costs Budget for the month of December Large Machine Set-up Processing Total costs Giant Total Yummy Pops Ending Finished Goods Budget for the month of December Large Cost per Input per Unit of Input Unit of Output Total Sugar Sticks Direct manufacturing labour Machine set-up Processing Total Yummy Pops Ending Inventories Budget for the month of December Quantity Direct Materials Sugar Sticks Finished goods Large Giant Total ending inventory Cost per unit Total Giant Input per Unit of Output Total Yummy Pops Cost of Goods Sold Budget for the month of December Beginning finished goods inventory, 1 December Direct materials used Direct manufacturing labour Manufacturing overhead Cost of goods manufactured Cost of goods available for sale Deduct ending finished goods inventory, 31 December Cost of goods sold Yummy Pops Non-manufacturing Costs Budget for the month of December Total Marketing and General Administration Yummy Pops Budgeted Income Statement for the month of December Revenues Cost of goods sold Gross margin Operating (nonmanufacturing) costs Bad debt expense Interest expense (for December) Net income Yummy Pops Budgeted Balance Sheet for the month of December Cash Accounts receivable Less: allowance for doubtful accounts Inventories Direct materials Finished goods Fixed assets Less: accumulated depreciation Total assets Liabilities and Equity Accounts payable Interest payable Long-term debt Common stock Retained earnings Total liabilities and equity Yummy Pops Budgeted Cash Flows for the month of December Cash balance, 31 December Add receipts Collections from November accounts receivable Collections from December accounts receivable Collections from December cash sales Total collection from customers Total cash available for needs Deduct cash disbursements Direct material purchases in November Direct material purchases in December Direct manufacturing labour Manufacturing overhead Nonmanufacturing costs Taxes Total disbursements Financing Interest Ending cash balance, 31 December