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Tyva makes a very popular undyed cloth sandal in one style, but in Regular and Deluxe. The Regular sandals have cloth soles and the Deluxe sandals have cloth-covered wooden soles. Tyva is preparing its budget for June 2018 and has estimated sales based on past experience. Other information for the month of June follows: Tyva uses a FIFO cost-flow assumption for finished-goods inventory. All the sandals are made in batches of 50 pairs of sandals. Tyva incurs manufacturing overhead costs, marketing and general administration, and shipping costs. Besides materials and labor, manufacturing costs include setup, processing, and inspection costs. Tyva ships 40 pairs of sandals per shipment. Tyva uses activity-based costing and has classified all overhead costs for the month of June as shown in the following chart: Input Prices

Direct materialsCloth$ 5.25 per yardWood$ 7.50 per board footDirect manufacturing labor $ 15 per direct manufacturing labor-hourInput Quantities per Unit of Output (per pair of sandals) RegularDeluxDirect materialsCloth1.3 yards1.5 yardsWood02 b.f.Direct manufacturing labor-hours (DMLH)5 hours7 hoursSetup-hours per batch2 hours3 hours ClothWoodBeginning inventory610 yards800 b.f.Target ending inventory386 yards295 b.f. Cost of beginning inventory$ 3.219$ 6.060\begin{matrix} \text{Direct materials}\\ \text{Cloth} & \text{\$ 5.25 per yard}\\ \text{Wood} & \text{\$ 7.50 per board foot}\\ \text{Direct manufacturing labor } & \text{\$ 15 per direct manufacturing labor-hour}\\ \text{Input Quantities per Unit of Output (per pair of sandals)}\\ \text{ } & \text{Regular} & \text{Delux}\\ \text{Direct materials}\\ \text{Cloth} & \text{1.3 yards} & \text{1.5 yards}\\ \text{Wood} & \text{0} & \text{2 b.f.}\\ \text{Direct manufacturing labor-hours (DMLH)} & \text{5 hours} & \text{7 hours}\\ \text{Setup-hours per batch} & \text{2 hours} & \text{3 hours}\\ \text{ } & \text{Cloth} & \text{Wood}\\ \text{Beginning inventory} & \text{610 yards} & \text{800 b.f.}\\ \text{Target ending inventory} & \text{386 yards} & \text{295 b.f. }\\ \text{Cost of beginning inventory} & \text{\$ 3.219} & \text{\$ 6.060}\\ \end{matrix}

Tyva accounts for direct materials using a FIFO cost-flow assumption.

Sales and Inventory information, Finished Goods RegularDeluxeExpected sales in units (pairs of sandals)2.0003.000Selling price$ 120$ 195Target ending inventory in units400600Beginning inventory in units250650Beginning inventory in dollars $ 23.250$ 92.625\begin{matrix} \text{Sales and Inventory information, Finished Goods}\\ \text{ } & \text{Regular} & \text{Deluxe}\\ \text{Expected sales in units (pairs of sandals)} & \text{2.000} & \text{3.000}\\ \text{Selling price} & \text{\$ 120} & \text{\$ 195}\\ \text{Target ending inventory in units} & \text{400} & \text{600}\\ \text{Beginning inventory in units} & \text{250} & \text{650}\\ \text{Beginning inventory in dollars } & \text{\$ 23.250} & \text{\$ 92.625}\\ \end{matrix}

Cost TypeDenominator ActivityRateManufacturingSetupSetup-hours$ 18 per setup-hourProcessingDirect manufacturing labor-hours (DMLH)$ 1.80 per DMLHInspectionNumber of pairs of sandals$ 1.35 per pairNonmanufacturingMarketing and general administrationSales revenue%ShippingNumber of shipments$ 15 per shipment\begin{matrix} \text{Cost Type} & \text{Denominator Activity} & \text{Rate}\\ \text{Manufacturing}\\ \text{Setup} & \text{Setup-hours} & \text{\$ 18 per setup-hour}\\ \text{Processing} & \text{Direct manufacturing labor-hours (DMLH)} & \text{\$ 1.80 per DMLH}\\ \text{Inspection} & \text{Number of pairs of sandals} & \text{\$ 1.35 per pair}\\ \text{Nonmanufacturing}\\ \text{Marketing and general administration} & \text{Sales revenue} & \text{8 \\\%}\\ \text{Shipping} & \text{Number of shipments} & \text{\$ 15 per shipment}\\ \end{matrix}

. 1. Prepare each of the following for June: a. Revenues budget, b. Production budget in units, c. Direct material usage budget and direct material purchases budget in both units and dollars; round to dollars, d. Direct manufacturing labor cost budget, e. Manufacturing overhead cost budgets for setup, processing, and inspection activities, f. Budgeted unit cost of ending finished-goods inventory and ending inventories budget, g. Cost of goods sold budget. h. Marketing and general administration and shipping costs budgets. 2. Tyva's balance sheet for May 31 follows.

Tyva Balance Sheet as of May 31Cash $ 9.435Accounts receivable$ 324.000Less: Allowance for bad debts16.200307.800InventoriesDirect materials 9.279Finished goods 115.875Fixed assets $ 870.00Less: Accumulated depreciation136.335733.665Total assets $ 1.176.054Liabilities and EquityTaxes payable10.800Interest payable750Long-term debt150.000Common stock300.000Retained earnings698.904Total liabilities and equity$ 1.176.054\begin{matrix} \text{Tyva Balance Sheet as of May 31}\\ \text{Cash} & \text{ } & \text{\$ 9.435}\\ \text{Accounts receivable} & \text{\$ 324.000}\\ \text{Less: Allowance for bad debts} & \text{16.200} & \text{307.800}\\ \text{Inventories}\\ \text{Direct materials} & \text{ } & \text{9.279}\\ \text{Finished goods} & \text{ } & \text{115.875}\\ \text{Fixed assets } & \text{\$ 870.00}\\ \text{Less: Accumulated depreciation} & \text{136.335} & \text{733.665}\\ \text{Total assets} & \text{ } & \text{\$ 1.176.054}\\ \text{Liabilities and Equity}\\ \text{Taxes payable} & \text{10.800}\\ \text{Interest payable} & \text{750}\\ \text{Long-term debt} & \text{150.000}\\ \text{Common stock} & \text{300.000}\\ \text{Retained earnings} & \text{698.904}\\ \text{Total liabilities and equity} & \text{\$ 1.176.054}\\ \end{matrix}


One role of government ls to keep the country's economic system running smoothly. If most citizens have jobs, people are generally happier with government's role. In some cases, the government might subsidize falling or struggling businesses in order to save jobs. What might be the reason why a business is failing?


Answered 2 years ago
Answered 2 years ago

The business might be failing because their sales have been steadily declining over the past several years. The business could also be failing because new laws and regulations have made it more difficult for them to operate efficiently.

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