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Management Accounting: Harte Beverages

Instructions:

• This assignment consists of two questions. The due date and time is noted in the unit information document as well as above.
• It is your responsibility to ensure you factor in any time difference between Darwin and other locations when submitting your assignment.
• Please construct your answer in the worksheet in Excel file and upload using the submission point for the assignment on Learnline.
• Marks will be given for the quality of your calculation formats (evident from the formulas on the Excel spreadsheet) even if your final calculations are not correct. Show your calculations clearly.
• Assignments submitted via e-mail will NOT be accepted.
• There is no need to complete a university cover sheet but DO please include your name & Student Number.
• Do not include the actual question in your submitted assignment. You need to only include your answers to the questions.

Ethics:

• This is not a group assignment, it is an individual assessment. Your solutions will likely be different from other students. If portions of your assignment are copied or very close to copying, all parties will be penalised for copying.

Question 1 (80 marks)

Harte Beverages bottles two soft drinks under licence to Cadaver Ltd. at its Nether plant. Bottling at this plant is highly repetitive, automated process. Empty bottles are removed from their carton, placed on a conveyor, and cleaned, rinsed, dried, filled, capped and heated (to reduce condensation). The only stock held is direct materials or else finished goods. There is no work in process.

The two soft drinks bottled by Harte Beverages are lemonade and diet lemonade. The syrup for both soft drinks is purchase from Costa Ltd. Syrup for the regular brand contains a higher sugar content than the syrup for the diet brand.

Harte Beverages uses a lot size of 1,000 cases as the unit of analysis in its budget. (Each case contains 24 bottles). Direct materials are expressed in terms of lots, where one lot of direct materials is the input necessary to yield one lot (1,000 cases) of beverage. In 2023, the following purchase prices are forecast for direct materials:

The two soft drinks are bottled using the same equipment. The equipment is cleaned daily, but it is only rinsed when a switch is made during the day between diet lemonade and lemonade. Diet lemonade is always bottled first each day to reduce the risk of sugar contamination. The only difference in the bottling process for the two drinks is syrup.

Summary data used in developing budgets for 2023 are as follows:

a Sales

• Lemonade, 1090 lots at $9,500 selling price per lot
• Diet lemonade, 550 lots at $8,520 selling price per lot

b Opening (1 January 2023) stock of direct materials

• Syrup for lemonade, 85 lots at $1,120 purchase price per lot
• Syrup for diet lemonade, 80 lots at $1,100 purchase price per lot
• Containers, 250 lots at $960 purchase price per lot
• Packaging, 410 lots at $910 purchase price per lot

c Opening (1 January 2023) stock of finished goods

• Lemonade, 110 lots at $5,300 per lot
• Diet lemonade, 55 lots at $5,200 per lot

d Target closing (31 December 2023) stock of direct materials

• Syrup for lemonade, 30 lots.
• Syrup for diet lemonade, 20 lots.
• Containers, 100 lots.
• Packaging, 200 lots.

e Target closing (31 December 2023) stock of finished goods

• Lemonade, 25 lots.
• Diet lemonade, 15 lots.
  1. Revenue budget (3 marks)
  2. Production budget (3 marks)
  3. Direct material usage budget (15 marks)
  4. Direct material purchase budget (10 marks)
  5. Direct manufacturing labour budget (6 marks)
  6. Manufacturing overhead cost budget (15 marks)
  7. Closing finished goods stock budget (10 marks)
  8. Cost of goods sold budget (3 marks)
  9. Marketing cost budget (1 mark)
  10. Distribution cost budget (1 mark)
  11. Administration cost budget (7 marks)
  12. Budgeted profit & loss. (6 marks)

6. Each lot requires 25 direct manufacturing labour hours at the 2023 budgeted rate of $35 per hour. Indirect manufacturing labour costs are included in the manufacturing overhead budget.
7. Variable manufacturing overhead is forecast to be $590 per hour of bottling time; bottling time is the time the filling equipment is in operation. It takes 3 hours to bottle
8. ne lot of lemonade and 3.5 hours to bottle one lot of diet lemonade. Fixed manufacturing overhead is forecast to be $1,300,000 for 2023.

h Hours of budgeted bottling time is the sole allocation base for all fixed manufacturing overheads.

I Administration costs are forecast to be 11.2% of the cost of goods manufactured for 2023. Marketing costs are forecast to be 10.5% of sales for 2023. Distributions costs are forecast to be 8.5% of sales for 2023.

Required:

Assume Harte Beverages uses the first in– first out (FIFO) method of costing all stock. On the basis of the preceding data, prepare the following budgets (in units and/or dollars as applicable) for 2023: