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    Activity-Based Budget for Merit Industries; Banana Computer

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    Activity-Based Budget

    Merrit Industries Inc. has the following budget information available for February:

    Administration $40,000
    Advertising $15,000
    Assembly 1/2 hour per unit X $8
    Direct materials 2 pounds per unit X $3
    Inspection $200 per batch of 1,000 units
    Manufacturing overhead $2 per unit
    Manufactured units 20, 000
    Product development $15,000
    Sales units 20,000 units X $30
    Setup cost $10 per batch of 1,000 units

    Required
    Prepared a February activity-based budgeting income statement

    P21-41

    Developing a Master Budget for a Manufacturing Organization: Challenge problem

    Banana Computer Accessories assembles a computer networking device from kits of imported components. You have been asked to develop a quarterly and annual operating budget and pro-forma income statement for 2010. You have obtained the following information:

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    Solution Summary

    The solution prepares a February activity-based budgeting income statement and also develops a Master Budget for a Manufacturing Organization.

    $2.19

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