Given the following costs for Bently Company, classify each cost as either variable

A) Given the following costs for Bently Company, classify each cost as either variable, fixed, or
mixed.
Total Cost at
2,000 Units
3,000 Units
Cost A
$12,900
$19,350
Cost B
12,300
16,650
Cost C
13,000
13,000

B) Robey Inc. manufactures two products, Extra and Basic. Overhead costs consist of setting up
machines, $200,000; machining, $450,000; and inspecting, $150,000. Additional information on
the two products is:
Extra
Basic
Total
Direct labor hours
15,000
25,000
40,000
Machine setups
600
400
1,000
Machine hours
24,000
26,000
50,000
Inspections
800
700
1,500
Show Computations
i) Determine the overhead applied to Extra using traditional costing based on direct labor hours
ii) Determine the overhead applied to Extra using activity based costing
iii) Does it appear activity based costing would be worthwhile in this case? Why?

Hose Inc. is preparing its budget for the coming year, 2014. The first step is to plan for the first quarter of that coming year. Hose gathered the following information from the managers.
Sales
Unit sales for November 2013
Unit sales for December 2013
Expected unit sales for January 2014
Expected unit sales for February 2014
Expected unit sales for March 2014
Expected unit sales for April 2014
Expected unit sales for May 2014
Unit selling price per hose

112,500
102,083
113,333
112,500
116,667
125,000
137,500
$12

Hose likes to keep 10% of the next month’s unit sales in ending inventory. All sales are on account.
85% of the Accounts Receivable are collected in the month of sale, and
15% of the Accounts Receivable are collected in the month after sale.
Accounts receivable on December 31, 2013, totaled $183,750.
Direct Materials
Item__
Plastic
Rubber

Amount used per unit
12 oz @ 6¢ per oz
4 oz @ 5¢ per oz

Inventory, Dec. 31,2013
3,883.125 lbs
1,294.375 lbs

Hose likes to keep 5% of the materials needed for the next month in its ending inventory.
materials is made within 15 days.
50% is paid in the month of purchase, and
50% is paid in the month after purchase.
Accounts Payable on December 31, 2013, totaled $120,595.

Payment for

Direct Labor
Labor requires 12 minutes per unit for completion and is paid at a rate of $10 per hour.
Manufacturing Overhead
Indirect materials
Utilities
Salaries
Depreciation
Property taxes
Janitorial

30¢ per labor hour
45¢ per labor hour
$42,000 per month
$16,800 per month
$2,500 per month
$1,300 per month

Selling and Administrative
Variable selling and administrative cost per unit is $1.62.
Advertising
Salaries
Depreciation

$15,000 a month
$72,000 a month
$2,500 a month

Other Information
The Cash balance on December 31, 2013, totaled $100,500, but management has decided it would like
to maintain a cash balance of at least $150,000 beginning on January 1, 2014.
Dividends are paid each month at the rate of $2.50 per share for 5,000 shares outstanding. The company has an open line of credit with Last National Bank. The terms of the agreement requires borrowing to be in $1,000 increments at 8% interest.
Hose borrows on the first day of the month and repays on the last day of the month.
A $500,000 equipment purchase is planned for February.
Required:
Prepare the following for January 2014:
a)Sales budget.
b)Production budget.
c)Direct materials budget.
d)Direct labor budget.
e)Manufacturing overhead budget
f)Selling and administrative budget.
g)Expected cash collections from customers.
h)Expected payments for materials purchases.
i)Cash budget.