Question

XYZ company make shoes of two kinds that are athletic shoes and climbing shoes. The athletic shoes made of fabric sole and the climbing shoes have fabric–covered leather sole. XYZ preparing its budget for Mar 2020 and has estimated sales based on past experience. The information is presented below:

Input prices
Direct materials:
Fabric	$5.25 per yard
Leather	$7.5 per square feet
Direct manufacturing labor	$16 per direct manufacturing labor hours

Input quantities per unit of output (per pair of shoe)	athletic	climbing
Direct materials:
Fabric	1.2 yard	1.4 yard
Leather	0	2 s.f.
Direct manufacturing labor	5 hours	7 hours
Setup-hours per batch	3 hours	4 hours

Inventory information (Direct material)	Fabric	Leather
Beginning inventory	620 yards	800 s.f
Target ending inventory	380 yards	295 s.f
Cost of beginning inventory	$3,219	$6,060

XYZ account for direct material using FIFO cost flow assumption.

Sales and inventory information, finished goods	athletic	climbing
Expected sales in units (pair of shoe)	2,000	3,000
Selling price	$120	$195
Target ending inventory in units	400	600
Beginning inventory in units	250	650
Beginning inventory in dollar	$23,250	$92,000

XYZ account for direct material using FIFO cost flow assumption.

All the shoes are made in batch of 50 pairs of shoe. XYZ incurs manufacturing overhead costs of marketing and general administration, and shipping cots. Besides materials and labor, manufacturing cost processing and inspection costs. XYZ ships 40 pair of shoe per shipment. XYZ uses activity based costing and has classified all overhead costs for the month of Mar as shown in the following table:

Cost type	Activity	Rates
Manufacturing:
Setup	Setup-hours	$18 per set-up per batch
Processing	Director labor hours	$1.8 per direct labor hour
Inspection	Number of shoes	$1.35 per pair per batch
Non-manufacturing:
Marketing and general administration	Sales revenue	8%
Shipping	Number of shipments	$15 per shipment

Prepare the master budget that includes revenue, contribution margin, operating income and all type of costs?

Answer 1

For preparing the budget, each information provided has to be collated as given below. After collating complete information, the same has to be plotted in the budget

1. Estimating Sales and related costs
Particulars	Atheltic Shoes	Climbing Shoes	Total
Shoes units for sale	2,000	3,000
Selling Price	120	195
Total Sales units x price	240,000	585,000	825,000
Marketing cost (8% of total sale value)	19,200	46,800	66,000
Number of shipments - 40 shoes per shipment	50	75
Rate per shipment	15	15
Shipment costs	750	1125	1,875

2. Estimating production requirements
Particulars	Atheltic Shoes	Climbing Shoes
Opening inventory	250	650
Closing inventory targeted	400	600
Movement (Closing- Opening)	150	(50)
Sale units estimated	2,000	3,000
Production required (Sales+ movement)	2,150	2,950

3. Estimating Direct Material Costs and Inventory
Particulars	Fabric	Leather	Total
Opening inventory - units	620	800
Closing inventory in unit	380	295
Movement (closing - opening)	(240)	(505)
Shoes sales estimated	2000 Atheltic + 3000 Climbing	3000 Climbing
Requirement per shoe	1.2 yard for Atheltic and 1.4 for Climbing	2 sf feet per shoe
Total qty required (shoes x requirement per shoe)	6,600	6,000
Net to be purchased after adjusting movement in stock	6,360	5,495
Cost per unit	5.25	7.5
Total Direct Material Cost	33,390	41,213	74,603
Clsoing stock value - Target closing stock x unit cost	1,995	2,213	4,208

4. Estimating Direct Labour Costs
Particulars	Atheltic Shoes	Climbing Shoes	Total
Labour hours required per shoe	5	7
Production estimated (2. Estimating production requirements)	2,150	2,950
Total hours required (labour hours x production)	10,750	20,650
Cost per hour as provided	16	16
Total Cost	1,72,000	3,30,400	5,02,400
Cost per shoe (total cost / production)	80	112

5. Estimating Set Up Costs
Particulars	Atheltic Shoes	Climbing Shoes	Total
Set up hours per batch	3	4
Production estimated (2. Estimating production requirements)	2,150	2,950
Batches - production/ 50	43	59
Set up per batch - set up hours x number of batches	129	236
Cost per set up	18	18
Set Up Costs	2,322	4,248	6,570
Cost per shoe	1.08	1.44

6. Estimating Processing Costs
Particulars	Atheltic Shoes	Climbing Shoes	Total
Direct Labour hours required for production (4. Estimating Direct Labour Costs)	10,750	20,650
Rate per hour	1.8	1.8
Processing Cost	19,350	37,170	56,520
Cost per shoe	9.00	12.60

7. Estimating Inspection Costs
Particulars	Atheltic Shoes	Climbing Shoes	Total
Production estimated (2. Estimating production requirements)	2,150	2,950
Rate per shoe	1.35	1.35
Inspection Cost	2,903	3,983	6,885

8. Deriving Closing Stock value for shoes - refer rate per shoe in each of the cost section
Particulars	Atheltic Shoes	Climbing Shoes	Total
Direct labour per shoes	80.00	112.00
Fabric (qty required 1.2 for atheltic and 1.4 for climbing x rate $5.25 ) per shoe	6.30	7.35
Leather (qty required 2 sft x rate per qty $7.5) per shoe	-	15.00
Set up Cost per shoe	1.08	1.44
Processing Cost per shoe	9.00	12.60
Inpection Cost per shoe	1.35	1.35
Total Cost per shoe	97.73	149.74	ekkarill92 Next > < Previous Related Solutions You work for Mike, a global company that specializes in manufacturing and selling athletic shoes for... You work for Mike, a global company that specializes in manufacturing and selling athletic shoes for both competition athletes and casual users. You are called into your supervisor’s office where he tells you that you have been assigned to be the leader of a virtual team. The team has been tasked with assessing the feasibility of the company manufacturing and marketing an inexpensive athletic shoe to be sold in Brazil. You will be responsible for getting the team up and... SPRINT , Inc., manufactures athletic shoes and athletic clothing for both amateur and professional athletes. The... SPRINT , Inc., manufactures athletic shoes and athletic clothing for both amateur and professional athletes. The company has two product lines (clothing and shoes), which are produced in separate manufacturing facilities; however, both manufacturing facilities share the same support services for information technology and human resources. The following shows total costs for each manufacturing facility and for each support department. Total Costs by Department (in thousands) Information technology (IT)                               $ 2,000 Human resources (HR)                                        1,000 Clothing                                                            $10,000 Shoes                                                                $8,000 Total... A producer of athletic shoes produces all of its basketball shoes at a constant marginal cost... A producer of athletic shoes produces all of its basketball shoes at a constant marginal cost of $50 per pair. It sells a brand-name version of the shoe with a basketball star endorsement to one market (A) and an identical “discount” brand version to another separate market (B). The demand for the shoes in each market is given by: QA = 100 – 0.2p QB = 40 – 0.4p What is the price per pair in the brand-name market (A)... Question: SPRINT , Inc., manufactures athletic shoes and athletic clothing for both amateur and professional athletes.... Question: SPRINT , Inc., manufactures athletic shoes and athletic clothing for both amateur and professional athletes. The company has two product lines (clothing and shoes), which are produced in separate manufacturing facilities; however, both manufacturing facilities share the same support services for information technology and human resources. The following shows total costs for each manufacturing facility and for each support department. Total Costs by Department (in thousands) Information technology (IT) $ 2,000 Human resources (HR) 1,000 Clothing $10,000 Shoes $8,000... The Mount Sunburn Athletic Club has two kinds of tennis players, Acers and Netters, in its... The Mount Sunburn Athletic Club has two kinds of tennis players, Acers and Netters, in its membership. A typical Ace has a weekly demand for hours of QA = 6 − P . A typical Netter has a weekly demand of QN = 3 − P/2. The marginal cost of a court is zero and there are one thousand players of each type. If the MSAB charges the same price per hour regardless of who plays, what price should it... K-Too Everwear Corporation manufactures two styles of mountain climbing shoes for women: Regular and fashion styles.... K-Too Everwear Corporation manufactures two styles of mountain climbing shoes for women: Regular and fashion styles. A pair of regular style shoes sells for $135, while the fashion style shoes sell for $160 per pair. The variable cost per pair for regular shoes is $38.94, and that for fashion style shoes is $41.5. K-Too Everwear has fixed costs of $1,800,000. K-Too Everwear has the sales mix of 70% and 30% for regular- and fashion-style shoes, respectively. What is K-Too Everwear’s... You are the new marketing manager for a firm that produces a line of athletic shoes... You are the new marketing manager for a firm that produces a line of athletic shoes to be targeted at the college student subculture. For your boss, write a memo in which you list some product attributes that might appeal to this subculture, list the steps in your customers’ purchase process, and recommend some marketing strategies that can influence their decision. NOTE: Don't copy form other sources! Suppose that prices of women’s athletic shoes have a mean of $75 and a standard deviation... Suppose that prices of women’s athletic shoes have a mean of $75 and a standard deviation of $17.89. What is the probability that the mean price of a random sample of 50 pairs of women’s athletic shoes will differ from the population mean by less than $5.00? In order to estimate the number of calls to expect at a new suicide hotline, volunteers contact a random sample of 40 similar hotlines across the nation and find that the sample mean... A researcher claims that the average cost of men’s athletic shoes is less than $80. He... A researcher claims that the average cost of men’s athletic shoes is less than $80. He selects a random sample of 36 pairs of shoes from a catalog and finds that the average cost is $75. Is there enough evidence to support the researcher’s claim at Alpha = 0.10 . Assume the population standard deviation is 19.2. Define Step 1 Step 2 Step 3 Step 4 Step 5 A researcher claims that the average cost of men’s athletic shoes is less than $80. He... A researcher claims that the average cost of men’s athletic shoes is less than $80. He selects a random sample of 36 pairs of shoes from a catalog and finds that the average cost is $75. Is there enough evidence to support the researcher’s claim at Alpha = 0.10 . Assume the population standard deviation is 19.2. Define Step 1 Step 2 Step 3 Step 4 Step 5 ADVERTISEMENT Subjects Accounting Advanced Math Anatomy and Physiology Biology Chemistry Civil Engineering Computer Science Economics Electrical Engineering Finance History Math Mechanical Engineering Operations Management Physics Psychology Statistics and Probability Nursing Other ADVERTISEMENT Latest Questions What type of defensive tools can we employ to protect our networks? C++ How to make this code take a class object instead of int for the vector... Q3. Identify a company where someone you know works (your father, friend or family member etc).... Smoky Mountain Corporation makes two types of hiking boots—the Xtreme and the Pathfinder. Data concerning these... Once the form in this file is submitted, create a new paragraph that will stack on... Please comments this C++ code and show screenshots of the outputs main.cpp #include<iostream> #include<vector> #include<string> #include"BST.h"... using the Oyez audio file and transcript (Links to an external site.)Links to an external site.... ADVERTISEMENT About @ 2020 WizEdu