Accounting-Comprehensive problem; ABC manufacturing, two products.

6- 38Comprehensive problem; ABC manufacturing, two products. Follete Inc. operates at capacity and makes plastic combs and hairbrushes.Although the combs and brushes are a matching set, they are sold individually and so the sales mix is not 1: 1. Follette Inc. is planning its annualbudget for fiscal year 2011. Information for 2011 follows:Input PricesDirect materialsPlasticBristlesDirect manufacturing labor$ 0.20 per ounce$ 0.50 per bunch$ 12 per direct manufacturing labor- hourInput Quantities per Unit of OutputCombsDirect materialsPlasticBristlesDirect manufacturing laborMachine- hours ( MH)Brushes5 ounces—0.05 hours0.025 MH8 ounces16 bunches0.2 hours0.1 MHInventory Information, Direct MaterialsBeginning inventoryTarget ending inventoryCost of beginning inventoryPlasticBristles1,600 ounces1,820 bunches1,766 ounces2,272 bunches$ 304$ 946Folette Inc. accounts for direct materials using a FIFO cost flow.Sales and Inventory Information, Finished GoodsCombsBrushesExpected sales in units12,00014,000Selling price$6$ 20Target ending inventory in units1,2001,400Beginning inventory in units6001,200Beginning inventory in dollars$ 1,800$ 18,120Folette Inc. uses a FIFO cost flow assumption for finished goods inventory.Combs are manufactured in batches of 200, and brushes are manufactured in batches of 100. It takes 20 minutes to set up for a batch ofcombs, and one hour to set up for a batch of brushes.Folette Inc. uses activity- based costing and has classified all overhead costs as shown in the following table:Cost TypeManufacturing: Materials handlingSetupProcessingInspectionNonmanufacturing:MarketingDistributionBudgeted Variable$ 11,4906,8307,7607,000Budgeted Fixed$ 15,00011,10020,0001,04014,100078060,000Cost Driver/ Allocation BaseNumber of ounces of plastic usedSetup- hoursMachine- hoursNumber of units producedSales revenueNumber of deliveriesDelivery trucks transport units sold in delivery sizes of 1,000 combs or 1,000 brushes.Do the following for the year 2011:1. Prepare the revenues budget.2. Use the revenue budget toa. find the budgeted allocation rate for marketing costs.b. find the budgeted number of deliveries and allocation rate for distribution costs.3. Prepare the production budget in units.4. Use the production budget toa. find the budgeted number of setups, setup- hours, and the allocation rate for setup costs.b. find the budgeted total machine- hours and the allocation rate for processing costs.c. find the budgeted total units produced and the allocation rate for inspection costs.5. Prepare the direct material usage budget and the direct material purchases budgets in both units and dollars; round to whole dollars.6. Use the direct material usage budget to find the budgeted allocation rate for materials handling costs.7. Prepare the direct manufacturing labor cost budget.8. Prepare the manufacturing overhead cost budget for materials handling, setup, and processing.Ques9. Prepare the budgeted unit cost of ending finished goods inventory and ending inventories budget.

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