Create your worksheets in excel.
Points are given for the quality of your calculation formats (evident from the formulas on the excel spreadsheet) even if your final calculations are not correct.
Your assessments must be lodged using Excel.
Required: 1) Make sure your entire assignment can be readily printed on A-4 paper in portrait (preferred) or landscape format with appropriate page breaks
2) Please show your calculations clearly.
Q.2 (Max Marks:90)
Bombera 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. Bombera Ltd is planning its annual budget for the financial year 2018. Information for 2018 follows:
Input prices
Direct materials
Wood
$5.30 per board metre
Glass $11.5 per sheet
Direct manufacturing labour
$14 per direct manufacturing labour-hour
Input quantities per unit of output
Chairs Tables
Direct materials
Wood 1.2 board metres 1.7 board metres
Glass
Direct manufacturing — 2 sheets
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
Target ending inventory in $70 $900
units
Beginning inventory in 8 400 2 050
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. Bombera 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 Non- 789 250 5 900 000 Machine-hours
manufacturing:
Marketing 2 011 200 4 500 000 Sales revenue
Distribution 54 000 380 000 Number of deliveries
Delivery trucks transport units sold in delivery sizes of 500 chairs or 500 tables.
Required
For the year 2018:
1. Prepare the revenues budget. (1 mark)
2. Use the revenues budget to:
a. find the budgeted allocation rate for marketing costs (1.5 marks)
b. find the budgeted number of deliveries and allocation rate for distribution costs. (3.5 marks)
3. Prepare the production budget in units. (2 marks)
4. Use the production budget to:
a. find the budgeted number of set-ups, set-up hours and the allocation rate for set-up costs (5 marks)
b. find the budgeted total machine-hours and the allocation rate for processing costs. (2.5 marks)
5. Prepare the direct materials usage budget and the direct materials purchases budget. (5 marks)
6. Use the direct materials usage budget to find the budgeted allocation rate for materials-handling costs. (2.5 marks)
7. Prepare the direct manufacturing labour cost budget. (1.5 marks)
8. Prepare the manufacturing overhead cost budget for materials handling, set-up and processing. (1.5 marks)
9. Prepare the budgeted unit cost of finished good (16.5 marks) and ending inventories budget. (4.5 marks)
10. Prepare the cost of goods sold budget. (3 marks)
11. Prepare the non-manufacturing overhead costs budget for marketing and distribution. (1 mark)
12. Prepare a budgeted income statement (ignore income taxes). (3 marks)
13. Compare the budgeted unit cost of a chair to its budgeted selling price. Why might Bombera Ltd continue to sell the chairs for only $70? (6 marks)