Information for this problem. Tyva makes a very popular undyed cloth sandal in o
ID: 2415227 • Letter: I
Question
Information for this problem.
Tyva makes a very popular undyed cloth sandal in one style, but in Regular and Deluxe. The regular sandals have cloth soles and Deluxe sandals have cloth-covered wooden soles.
Tyva is preparing its budget for June 2015 and has estimated sales based on past experience.
Input prices
Direct Materials
Cloth $5.25 per yard and Wood at $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 sandals) Cloth 1.5 yards (Deluxe Sandals)
Wood 0 (Regular sandals) Wood 2 b.f. (Deluxe sandals)
Direct Manufacturing labor hours (DMLH) 5 hours (Regular sandals) 7 hours (deluxe sandals)
Set-up hours per batch 2 hours (Regular sandals) 3 hours (Deluxe sandals)
Inventory Information, Direct Materials
Beginning Inventory (Cloth) 610 yards (Wood) 800 b.f.
Target ending inventory (Cloth) 386 yards (Wood) 295 b.f.
Cost of beginning inventory (Cloth) $3,219 (Wood) $6,060
Tyva accounts for direct materials using a FIFO cost flow assumption.
Sales and Inventory Information, Finished Goods
Expected sales in units (pairs of sandals) (Regular sandals) 2,000 (Deluxe sandals) 3,000
Selling price (Regular) $120 Deluxe ($195)
Target ending inventory in units (Regular) 400 (Deluxe) 600
Beginning inventory in units (Regular) 250 (Deluxe) 650
Beginning inventory in dollars (Regular) $23,250 (Deluxe) $92,625
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. Besides materials and labor, manufacturing costs include setup, processing, and inspection costs. Tyva ships 40 pairs of sandals per shipment. Tyva uses activitybased costing and has classified all overhead costs for the month of June as shown in the following chart:
Manufacturing
Setup (Cost Type) Set-up hours (Denominator Activity) $18 per set up hr (Rate)
Processing (Cost Type) Direct manufacturing labor hours (D. Activity) $1.80 per DMLH (Rate)
Inspection (Cost Type) Number of pais of sandals (D. Activity) $1.35 per pair (Rate)
Nonmanufacturing
Marketing andGeneral Admin (Cost Type) Sales Revenue ( D. Activity) 8% (Rate)
Shipping (Cost Type) # of shipments (D. Activity) $15 per shipment (Rate)
1) Using the information provided prepare each of the following for June:
a. Revenues budget
b.Production budget in units
c. Direct Material usage budget and Direct Material purchase budget in both units and dollars;
(round to dollars)
d. Direct Manufacturing labor cost budget
e. Manufacturing overhead cost budgets for setup, processing, and inspection
f. Budgeted unit cost of ending finished goods inventory and ending inventories budget.
g. Cost of goods sold budget.
h. Marketing and General Admin. and shipping costs budget.
2)Tyva's balance sheet for May 31 follows.
Assets:
Cash $9,435
A/R $324,000
Less: Allowance for bad debts $16,200
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 Equity
A/P $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
Using the balance sheet and the following information to prepare a cahs 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 $10,800 of taxes owed as of May 31 in the month of June. Income tax
expense for June is zero.
- 30% of processing, setup, and inspection costs and 10% of marketing and general administration
and shipping costs are depreciation.
3) Prepare a budgeted income statement for June and a budgeted balance sheet for Tyva as of June 30,2105.
**** This is the third time I've submitted this question hopefully someone can help!
Explanation / Answer
To prepare the revenue budget for june , the following information is required
1 ) The sales revenue for the month of june category wise
2 ) Cost of goods sold
Step 1 – to calculate the production budget of finished goods for the month of June
let us calculate direct material usage budget
let us calculate the direct material purchase budget
Now let us calculate the direct manufacturing labor budget
Production budget for the month of june Regular sandals Deluxe Sandals Particulars selling rate per sandal ($) quantity Amount ($) selling rate per sandal ($) quantity Amount ($) Sales 93 250 23250 143 650 92950 120 1750 210000 120 2350 282000 2000 233250 3000 374950 Closing stock 400 600 Opening balance 93 250 23,250 143 650 92,625 Production ( Sales + Closing stock - opening stock) 120 2150 258000 195 2950 575250 working note - As FIFO method is used which means first which is produced is sold first sales will first include opening stock and balance from production from the month