ACCM 4100 Management Accounting-Budget Preparing Assessment

CASE STUDY USING EXCEL SPREADSHEET 

Yosemite Ltd manufactures wardrobes. Your team works in the accounting department and has been  tasked with preparing the budget for the next month (Question 1). Your team has also been asked to  provide management with some information and advice on kaizen budgeting (Question 2). 

Yosemite makes two products: 

Premium wardrobes - large wardrobes with mirrors 

De Luxe wardrobes - medium sized wardrobes with an innovative shelving solution Direct manufacturing labour is 3 hours for the premium wardrobe and 5 hours for the De Luxe. The budgeted direct material usage for each product in 2017 is: 

Unit cost data is expected to be the same for April as it was in March for labour and all materials except  Balsa wood where a change in supplier has resulted in a cost increase of 50%. Detailed cost data is as  follows: 

Manufacturing overhead (both variable and fixed) is allocated to each wardrobe on the basis of budgeted  direct manufacturing labour hours. 

The budgeted variable manufacturing overhead rate for April 2017 is $35 per direct manufacturing labour hour. 

The budgeted fixed manufacturing overhead for the month is $42,500. Both variable and fixed  manufacturing overhead costs are allocated to each unit of finished goods on the basis of direct 

Budgeted sales for April 2017 are 740 units of the premium and 390 units of the De Luxe. The budgeted  selling prices per unit in April 2017 are $1,020 for the Premium and $1,600 for the De Luxe.  

Assume the following in your answer: 

• Work-in-process inventories are negligible and ignored. 
• Direct materials inventory and finished goods inventory are costed using the FIFO method.
• Unit costs of direct materials purchased and finished goods are constant in April 2017. 

REQUIRED: 

1) Prepare the following budgets for April 2017: 

1.  Sales revenue budget (units and $)
2.  Production budget in units
3.  Direct materials usage budget and direct materials purchases budget (both budgets in units and $)
4.  Direct manufacturing labour budget
5.  Manufacturing overhead budget
6.  Ending inventories budget (direct materials and finished goods)
7.  Cost of goods sold budget 

For each budget, prepare by product (Premium and De Luxe) and in total. 

2) Management has also requested your team to give them some understanding on a new aspect of  budgeting that has come to their attention. They have outlined a few questions for your team to  address: 

1.  What is kaizen budgeting?
2.  How does kaizen budgeting differ from traditional budgeting?
3.  How could Yosemite Ltd incorporate elements of kaizen budgeting into its current budgeting  process? Would you recommend they do so and why or why not?