Question

Comprehensive budgeting problem; activity-based costing,operating and financial budgets. Tyva makes a very popular undyedcloth sandal in one style, but in Regular and Deluxe. The Regularsandals have cloth soles and the Deluxe sandals have cloth-coveredwooden soles. Tyva is preparing its budget for June 2015 and hasestimated 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 per direct manufacturinglabor-hour

Input Quantities per Unit of Output (per pair ofsandals)

	Regular	Deluxe
Direct materials
Cloth	1.3 yards	1.5 yards
Wood	0	2 b.f.
Direct manufacturing labor-hours	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 flowassumption.

Sales and Inventory Information, FinishedGoods

	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

Tyva uses a FIFO cost flow assumption for finished goodsinventory.

All the sandals are made in batches of 50 pairs of sandals. Tyvaincurs manufacturing overhead costs, marketing and generaladministration, and shipping costs. Besides materials and labor,manufacturing costs include setup, processing, and inspectioncosts. Tyva ships 40 pairs of sandals per shipment. Tyva usesactivity-based costing and has classified all overhead costs forthe month of June as shown in the following chart:

Cost Type	Denominator Activity	Rate
Manufacturing
Setup	Setup hours	$18 per setup hour
Processing	Direct man. Labor-hours	$1.80 per DMLH
Inspection	Number of pairs of sandals	$1.35 per pair
Nonmanufacturing
Marketing & general admin	Sales revenue	8%
Shipping	Number of shipments	$15 per shipment

Questions

1.Prepareeach of the following for June:

a.Revenuesbudget

b.Productionbudget in units

c.Directmaterial usage budget and direct material purchases budget in bothunits and dollars, round to dollars

d.Directmanufacturing labor cost budget

e.Manufacturing overhead cost budgets forsetup, processing, and inspection activities

f.Budgetedunit cost of ending finished goods inventory and ending inventoriesbudget

g.Cost ofgoods sold budget

h.Marketingand general administration and shipping costs budget

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

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 & equity	1,176,054

Use the balance sheet and the following information to prepare acash budget for Tyva for June. Round to dollars.

All sales are on account; 60% are collected in the month of thesale, 38% are collected the following month, and 2% are nevercollected and written off as bad debts.

All purchases of materials are on account. Tyva pays for 80% ofpurchases in the month of purchase and 20% in the followingmonth.

All other costs are paid in the month incurred, including thedeclaration and payment of a $15,000 cash dividend in June.

Tyva is making monthly interest payments of 0.5% (6%per year) ona $150,000 long-term loan.

Tyva plans to pay the $10,800 of taxes owed as of May 31 in themonth of June. Income tax expense for June is zero.

30% of processing, setup, and inspection costs and 10% ofmarketing and general administration and shipping costs aredepreciation.

Prepare a budgeted income statement for June and a budgetedbalance sheet for Tyva as of June 30, 2015.

Listed below are the answers to the first question. Ijust need help with preparing a cash budget for June, and abudgeted income statement and budgeted balance sheet as of June30.

1
a.	Revenue Budget
	For the Month of June 2015
				Regular	Deluxe
	Expected sales in units			2,000	3,000
	Selling price			120	195
	Total sales			$240,000	$585,000
b.	Production Budget in Units
	For the Month of June 2015
						Regular	Deluxe
	Budgeted unit sales					2,000	3,000
	Add: target ending finished goods inventory					400	600
	Total required units					2,400	3,600
	Deduct: beginning finished goods inventory					250	650
	Units of finished goods to be produced					2,150	2,950
c.	Direct Material Usage Budget in Units andDollars
	For the Month of June 2015
	Direct materials required for
			Cloth	Wood	Cloth	Wood
		Units	Yards	B.F.	Total	Total
	Regular	2,150	1.3	0	2,795	0
	Deluxe	2,950	1.5	2	4,425	5,900
					7,220	5,900
	Cost Budget - to be purchased
			Beg.	Need to	Cost to
			Inv.	purchase	purchase
	Cloth	7,220	610	6,610	5.25	34,703
	Wood	5,900	800	5,100	7.5	38,250
						72,953
	Cost of direct materials to be used thisperiod
			available from beginning inventory				Total
	Cloth	34,703	3,219				37,922
	Wood	38,250	6,060				44,310
							82,232
	Direct Materials Purchases Budget
	For the Month of June 2015
						Cloth	Wood	Total
	Physical units budget
	To be used in production					7,220	5,900
	Add: target ending direct material inventory					386	295
	Total requirements					7,606	6,195
	Deduct: beginning direct material inventory					610	800
	Purchases to be made					6,996	5,395
	Cost of product					5.25	7.5
	Totals					36,729	40,463	77,192
d.	Direct Manufacturing Labor Cost Budget
	For the Month of June 2015
		Output	Labor hrs	Total	Wage	Total
		units	per unit	hours	rate
	Regular	2,150	5	10,750	15	161,250
	Deluxe	2,950	7	20,650	15	309,750
				31,400		471,000
e.	Manufacturing Overhead Cost Budget for Setup,Processing, and Inspection Activities
	For the Month of June 2015
	Total production		2,150	2,950	5,100
	Total sales		2,000	3,000	5,000
	No. of setup hours		86	118	204
	No. of shipments		50	75	125
	Labor hours		10,750	20,650	31,400
			Setup	Processing	Inspection	Total
	Allocation		Setup hrs	Labor hrs	No. pairs
	Rate		18	1.8	1.35
	No. of Activity		204	31,400	5,100
	Total		3,672	56,520	6,885	67,077
f.	Budgeted Unit Cost of Ending Finished GoodsInventory
	For the Month of June 2015
				Cost per	Regular	Total	Deluxe	Total
				Unit of	Input per		Input per
				Input	Unit		Unit
					Output		Output
	Cloth			5.25	1.3	6.825	1.5	7.875
	Wood			7.5	0	0	2	15
	Direct Manufacturing hours			15	5	75	7	105
	Machine setup			18	0.04	0.72	0.06	1.08
	Processing			1.8	5	9	7	12.6
	Inspection			1.35	1	1.35	1	1.35
	Total					92.895		142.905
	Ending Inventories Budget
	For the Month of June 2015
			Quantity	Cost per		Total
				Unit
	Direct materials
	Cloth		386	5.25	2026.5
	Wood		295	7.5	2212.5	4239
	Finished goods
	Regular		400	92.895	37158
	Deluxe		600	142.905	85743	122901
	Total ending inv.					127140
g.	Cost of Goods Sold Budget
	For the Month of June 2015
						Regular	Deluxe
	Beginning finished goods inventory, Jun 1					23250	92625		115875
	Direct materials used (c)							82232
	Direct manufacturing labor (d)							471000
	Manufacturing overhead (e)							67077
	Cost of goods manufactured								620309
	Cost of goods available for sale								736184
	Deduct ending finished goods inventory, June 30(f)								122901
	Cost of goods sold								613283
h.	Nonmanufacturing Costs Budget
	For the Month of June 2015
	Marketing and general administration				825000	0.08	66000
	Shipping
	(5,000 pairs / 40 pairs per shipment)				125	15	1875
	Total						67875

Again, I just need help with the cash budget question, and thebudgeted income statement and budgeted balance sheet as ofJune.

Thank you!