6-43 Comprehensive budgeting problem; activity-based costing, operating, and financial

budgets.

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 and has estimated sales based on past experience.

Other information for the month of June follows:

Input Prices
Direct materials
Cloth $ 5,25 per yard
Wood $ 7,50 per board foot
Direct manufacturing labor $ 15,00 per direct manufacturing labor-hour

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

Regular Deluxe
Direct materials
Cloth 1,30 yards 1,50 yards
Wood - b.f. 2 b.f.
Direct manufacturing labor-hours (DMLH) 5 hours 7 hours
Setup-hours per batch 2 hours 3 hours

Inventory Information, Direct Materials

Cloth Wood
Beginning inventory 610 yards 800 b.f.
Target ending inventory 386 yards 295 b.f.
Cost of beginning inventory $ 3.219 $ 6.060

Tyva accounts for direct materials using a FIFO cost flow assumption.

Sales and Inventory Information, Finished Goods

Regular Deluxe
Expected sales in units (pairs of sandals) 2.000 3.000
Selling price $ 120 $ 195
Target ending inventory in units 400 600
Beginning inventory in units 250 650
Beginning inventory in dollars $ 23.250 $ 92.625

September 22, 2020 1

Tyva uses a FIFO cost flow assumption for 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. Besided 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 all overhead costs for
the month of June as shown in the following chart:

Cost type Denominator Activity Rate

Manufacturing
Setup Setup-hours $ 18 per setup-hours
Processing Direct manufacturing labor-hours $ 1,80 per DMLH
Inspection Number of pairs of sandals $ 1,35 per pair
Nonmanufacturing
Marketing and general administration Sales revenue 8%
Shipping Number of shipments $ 15,00 per shipment

1. Prepare each of the following for June:

a. Revenues budget
b. Production budget in units
c. Direct material usage budget and direct material purchases budget in both units and
dollars; round to dollars
d. Direct manufacturing labor cost budget
e. Manufacturing overhead cost budgets for setups, 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

2. Tyva’s balance sheet for May 31 follows.

Tyva Balance Sheet as of May 31

Assets
Cash $ 9.435
Accounts receivable $ 324.000
Less: Allowance for bad debts 16.200 307.800
Inventories
Direct materials 9.279
Finished goods 115.875
Fixed assets $ 870.000
Less: Accumulated depreciation 136.335 733.665
Total assets $ 1.176.054

Liabilities and Equity

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 payment of
a $15,000 cash dividend in June.
 Tyva is making monthly interest payments of 0.5% (6% per year) on a $150,000 long-
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 are depreciation.
3. Prepare a budgeted income statement for June and a budgeted balance sheet for Tyva as
of June 30, 2015.

a Revenue Budgets

Budget
For the Month of June, 2015

Selling Total
Produk Unit Price Revenues

$ $

Total $ 825.000

b Production Budget

Product
Regular Deluxe

Add :
Total required units
Deduct :
Units of finished goods to be produced 2.150 2.950
c Direct Material Budget

Material
Cloth Wood Wood
Physical Units Budget
Direct materials required for
Regular ( units x yd.; b.f.) yds. b.f.
Deluxe ( units x yd.; b.f.) yds. b.f.
Total quantity of direct materials to be used yds. b.f.

Cost Budget
Available from beginning direct materials inventory
(under a FIFO cost-flow assumption) $ $
To be purchased this period
Cloth : ( yds. - yds.) x $ per yd. $
Wood : ( yds. - yds.) x $ per b.f. $
$ $ $ 82.231,50

Total
Physical Units Budget
To be used in production yds. b.f.
Add : yds. b.f.
Total requirements yds. b.f.
Deduct : yds. b.f.
Purchases to be made yds. b.f.

Cost Budget
Cloth : ( yds. x $ ) $
Wood : ( b.f. x $ ) $
Total $ $ $ 77.191,50
d Direct manufacturing labor cost budget

Output Units Direct Total Hourly Wage Total

Produced Manufacturing Hours Rate
Labor-Hours per
Unit
Regular $ $
Deluxe
Total $ 471.000

e Manufacturing overhead costs budget for setups, processing, and inspection activities

Additional computation for number of batch required in production:

Produc Total
Regula t Deluxe
Units of finished goods to be produced r
Number of sandals in one batch ÷
batche
÷ s
Number of batches required
batches

Setup hours per batch

hours hour
hours shours hours
x
x
Total setup hours required

Total
Machine setup ( hours x $ per setup-hours) $
Processing ( DLMH x $ per DMLH)
Inspection ( pairs of sandal x $ per pair) 68.139,00
Total $

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

Additional computation for machine setup-hours for each unit:

Pairs of sandal in each batch

Setup-hours per batch
Regular Deluxe hours hours
÷ pairs ÷ pairs
Setup-hours per unit (pairs)
 Reguler Deluxe
Cost per Input per Input per
Unit of Unit of Output Total Unit of Output Total
Cloth $ Input yd. $ yd. $
Wood b.f. b.f.
Direct manufacturing labor hr. hr.
Machine setup hr. hr.
Processing hrs hrs
Inspection pair pair
92,895 142,905
Total $ $

Ending Inventories Budget

June, 2015

Quantity Cost per Unit Total

Direct Materials
Cloth yds. $ $
Wood b.f. $ $

Finished goods
Regular pairs of sandals $ $
Deluxe pairs of sandals $ $
Total ending inventory $ 127.140,00

g Cost of goods sold budget

Cost of Goods Sold Budget

For the Month of June, 2015

Beginning finished goods inventory, June 1 ( $ + $ ) $

Direct materials used (requirement c) $

Direct manufacturing labor (requirement d)
Manufacturing overhead (requirement e)
Cost of goods manufactured
Cost of goods available for sale
Deduct : ending finished goods inventory, June 30 (requirement f)
Cost of goods sold $ 614.344,50
 h Marketing and general administration and shipping cost budget

Total

Marketing and general administration

( $ x %) $
Shipping (
pairs ÷ pairs per shipment) x
$ 67.875,00
$
2 Cash Budget

Cash Budget
June 30, 2015

Cash balance, June 1 (from balance sheet ) $

Add receipts
Collection from May accounts receivable $
Collection from June accounts receivable
( $ x %)
Total collection from customers
Total cash available for needs (x )

Deduct cash disbursments

Direct material puchase in May
Direct material purchase in June
( $ x %)
Direct manufacturing labor
Manufacturing overhead
( $ x % because 30% is depr.)
Nonmanufacturing costs
( $ x % because 10% is depr.)
Taxes
Dividend
Total disbursments (y )
Financing
Interest at 6% ( x %x ) (z)
Ending cash balance, June 30 (x)-(y)-(z) $ 128.547,00
3 Budgeted income statement

Revenues $
Bad debt expense ( $ x %) 16.500,00
Net revenues $
Cost of goods sold
Gross margin
Operating (nonmanufacturing) costs
Interest expense (for June)
Net income $ 125.530,50

Budgeted Balance Sheet

Assets
Cash $
Accounts receivable ($ x %) $
Less: allowance for doubtful accounts
Inventories
Direct materials
Finished goods

Fixed assets
Less: accumulated depreciation
( $ 136.335 + %x $ + %x $ )
Total assets $ 1.275.622,80

Liabilities and Equity

Accounts payable( $ x %)
Interest payable
Long-term debt
Common stock
Retained earnings ($ + $ - $ )
Total liabilities and equity 1.275.622,80
Pilih Jawaban yang paling tepat

1) Which of the following is true of a budget?

A) Budgets are used to express only the operational plans and not the strategic plans of a company.
B) Budgets do not account for nonfinancial aspects of the upcoming period.
C) Budgets are most useful when they are planned independent of the company's strategic plans.
D) Budgets help managers to revise their plans and strategies.

2) Which of the following is a financial budget?

A) budgeted balance sheet
B) cash receivables budget
C) production budget
D) cost of goods sold budget

3) Which of the following is a reason why top managers want lower-level managers to participate in
the budgeting process?
A) To benefit from their experience with the day-to-day aspects of running the business.
B) To reduce the time and cost expended in the budgeting process.
C) To ensure that they do not introduce any budgetary slack.
D) To ensure that the budgets are administered rigidly given the changing market conditions.

4) Demanding but achievable targets tend to .

A) be set by subordinate managers to create intrinsic reasons to achieve targets
B) create unnecessary anxiety that de-motivates employees
C) improve performance of employees when they are closer to the target
D) be perceived as ambitious with little chance of success in achieving targets

5) Which of the following is referred to as the bottom-up aspect of the budgeting process?
A) lower-level managers setting their individual targets that aggregate to be the company-wide
target
B) senior managers consulting middle- and lower-level managers to investigate any deviations
from the budget
C) lower-level managers implementing the budgets with senior managers monitoring progress and
investigating deviations
D) lower-level managers providing inputs to the budgeting process based on their specialized
knowledge

6) Which of the following is a component of operating budgets?

A) sales budget
B) budgeted statement of cash flows
C) capital expenditures budget
D) budgeted balance sheet
7) The order to follow when preparing the operating budget is .
A) revenues budget, production budget, and direct manufacturing labor costs budget
B) costs of goods sold budget, production budget, and cash budget
C) revenues budget, manufacturing overhead costs budget, and production budget
D) cash expenditures budget, revenues budget, and production budget

10) The budgeting process is most strongly influenced by .

A) the capital budget
B) the budgeted statement of cash flows
C) the sales forecast
D) the production budget

11) Costs such as supervision, depreciation, maintenance, supplies, and power. are included in the
A) capital expenditures budget
B) distribution costs budget
C) revenues budget
D) manufacturing overhead budget

12) The number of units in the sales budget and the production budget may differ because of a
change in .
A) finished goods inventory levels
B) overhead charges
C) direct material inventory levels
D) sales returns and allowances

13) Budgeted production equals .

A) beginning finished goods inventory + budgeted unit sales - targeted ending finished goods
inventory
B) targeted ending finished goods inventory + beginning finished goods inventory - budgeted unit
sales
C) budgeted unit sales + targeted ending finished goods inventory - beginning finished goods
inventory
D) budgeted unit sales + targeted ending finished goods inventory + beginning finished goods
inventory

14) Total finished units to be produced is based on the .

A) direct material purchase budget
B) budgeted sales units
C) direct material usage budget
D) budgeted manufacturing overhead

15) The Japanese use the term kaizen when referring to .

A) scarce resources C) continuous improvement
B) pro forma financial statements D) the sales forecast
 Management Accounting - Tugas Mandiri 01 – Master
Budget

The following information pertains to the January operating budget for Casey Corporation.

• Budgeted sales for January $200,000 and February $100,000.

• Collections for sales are 60% in the month of sale and 40% the next month.
• Gross margin is 30% of sales.
• Administrative costs are $10,000 each month. Tuliskan perhitungan (kasar)
• Beginning accounts receivable is $20,000. anda untuk setiap jawaban!
• Beginning inventory is $14,000.
• Beginning accounts payable is $65,000. (All from inventory
purchases.)
• Purchases are paid in full the following month.
• Desired ending inventory is 20% of next month's cost of goods sold (COGS).

16) For January, budgeted cash collections are .

A) $200,000
B) $140,000
C) $120,000
D) $20,000

17) At the end of January, budgeted accounts receivable is .

A) $40,000
B) $80,000
C) $120,000
D) $160,000

18) For January, budgeted cost of goods sold is .

A) $200,000
B) $140,000
C) $126,000
D) $112,000

19) For January, budgeted net income is .

A) $60,000
B) $50,000
C) $40,000
D) $30,000

20) For January, budgeted cash payments for purchases are .

A) $100,000
B) $70,000
C) $65,000
D) $50,000

21) At the end of January, budgeted ending inventory is .

A) $10,000
B) $14,000
C) $20,000
D) $22,000

February 16, 2020 12

22) The flexible budget contains .
A) budgeted amounts for actual output
B) budgeted amounts for planned output
C) actual costs for actual output
D) actual costs for planned output

23) Which of the following items will be same for a flexible budget and a master budget?
A) total variable cost
B) total fixed costs
C) total contribution margin
D) total revenues

Jawab pertanyaan 24-26 dengan menggunakan informasi berikut.

Domose Inc. planned to use $150 of material per unit but actually used $147 of material per unit,
and planned to make 1,100 units but actually made 900 units.

24) The flexible-budget amount for materials is .

A) $165,000
B) $135,000
C) $161,700
D) $132,300
Answer: B

25) The flexible-budget variance for materials is .

A) $2,700 favorable
B) $2,700 unfavorable
C) $3,300 unfavorable
D) $3,300 favorable

26) The sales-volume variance for materials is .

A) $2,700 favorable
B) $29,400 unfavorable
C) $30,000 unfavorable
D) $2,700 unfavorable