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a$.$ Revenues budget $(2$ marks$)$

b$.$ Production budget in units $(2$ marks$)$

c$.$ Direct materials usage budget and direct materials purchases budget $(10$ marks$)$

d$.$ Direct manufacturing labour cost budget $(2$ marks$)$

e$.$ Manufacturing overhead cost budget broken down by the $3$ activities. $(6$ marks$)$

f$.$ Budgeted unit costs of ending finished goods inventory $(6$ marks$)$

g$.$ Budgeted total costs of ending finished goods inventory and direct materials inventory $(4$ marks$)$

h$.$ Cost of goods sold budget $(5$ marks$)$

i$.$ Selling, general and administration and shipping costs budget $(2$ marks$)$

BUDGET DATA:

Akin Manufacturing Ltd$.($AML$)$ produces and sells $2$ products: A$+33$ and AA$34.$ A$+33$ currently sells for $$150$ and they believe they will be able to sell $2,600$ units in October. AA$34$ currently sells for $$205$ and it is estimated there will be $3,000$ units sold in October.

On October $1,$ there were $300$ units of A$+33$ with a cost of $$20,400.$ They plan to have $500$ units of A$+33$ in stock on October $31.$ On October $1,$ there were $650$ units of AA$34$ in stock with a cost of $$65,260.$ The October $31$ estimate of finished goods required for AA$34$ is $750$ units.

AML uses FIFO cost$-$flow assumption for finished goods inventory.

Each product uses $2$ direct materials: Mercury and Plastic. The Mercury cost $$6\mathrm{.}50$ per litre and the plastic costs $$8\mathrm{.}60$ per metre. Additional information relating to the materials is below.

Input quantities per Unit of Output

A$+33$ AA$34$

Direct materials:

Mercury $($litres per unit$)0\mathrm{.}8$ litres $1\mathrm{.}4$ litres

Plastic $($metres per unit$)1$ metre $2$ metres

Inventory information: Direct Materials

Mercury Plastic

Beginning inventory $640$ litres $810$ metres

Beginning inventory cost $$3,936$ $$6,156$

Target ending inventory $370$ litres $285$ metres

AML uses FIFO cost$-$flow assumption for materials inventory.

The workers are paid $$16$ per direct manufacturing labour hour. It takes $3$ hours to manufacture a unit of A$+33$ and $4$ hours for each unit of AA$34.$

As well as the costs mentioned above, they also have manufacturing overhead costs, and selling, general and administrative costs. As AML has to change the setup in the facility to switch between A$+33$ and AA$34$ products, they create $50$ units in each batch. It takes $2$ hours to setup the factory for a batch of A$+33$ and it takes $3$ hours to setup the factory for a batch of AA$34.$

AML uses activity$-$based costing and has classified all manufacturing overhead costs for the month of October as follows:

Manufacturing Overhead Categories

Annual Costs Annual Denominator Activity

Setup $$68,1603,408$ Setup hours

Processing $$570,240237,600$ DMLH

Inspection $$47,04067,200$ Units

AML has selling, general and administrative costs that are $8\%$ of the sales revenue. Shipping costs are $$20$ per shipment. The products are sold in quantities of $40$ units per shipment.

Part $1.(39$ marks$)$

Prepare each of the following schedules for the operating budget for October:

a$.$ Revenues budget

b$.$ Production budget in units

c$.$ Direct materials usage budget and direct materials purchases budget in both units and dollars. Round to $2$ decimals.

d$.$ Direct manufacturing labour cost budget

e$.$ Manufacturing overhead cost budgets for setup, processing and inspection activities.

f$.$ Budgeted unit cost of ending finished goods inventory

g$.$ Budgeted total costs of ending finished goods inventory and ending direct materials inventories budget

h$.$ Cost of goods sold budget

i$.$ Selling, general and administration and shipping costs budget

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