E22-23.
a.
HIGHLANDS INDUSTRIES
Activity-Based Manufacturing Cost Budget
For the Month of February
Unit-level costs:
Direct materials: 2 lbs. × 30,000 × $4
$240,000
Assembly: ½ × 30,000 × $12
180,000
Manufacturing overhead: $5 × 30,000
150,000
$570,000
Batch-level costs:
Setup: $15 × 30 batches
450
Inspection: $250 × 30 batches
7,500
7,950
Product-level costs:
Product development
20,000
Facility-level costs:
Factory administration
65,000
Budgeted manufacturing costs
$662,950
b. The development of an effective budget is a difficult job. It is also a necessary one.
Organizations that do not plan are likely to wander aimlessly and ultimately succumb to
the swirl of current events. The formal development of a budget helps to ensure both
success and survival. Budgeting compels planning; it improves communications and
coordination among organizational elements; it provides a guide to action; and it provides
a basis of performance evaluation. Budget models are also used to analyze and prepare
for various business risks.
E22-24.
JONAH FREIGHT
Loading Department Activity-Based Budget
For the Month of November
Activities:
Cleaning:
Trucks [(20 days × 15 trucks × 20 minutes) / 60 minutes]
100.00 hours
Docks [(20 × 15 × 10) / 60]
50.00 hours
Total cleaning time
150.00 hours
Loading:
Instructions [(20 × 15 × 30)/60]
150.00 hours
Cleaning:
Labor (150 hours × $22)
Overhead ($10,800 × 0.20)
2,160
Supervision ($5,400 × 0.10)
540
Loading:
Overhead ($10,800 × 0.80)
Supervision ($5,400 × 0.60)
Total
