Step one: create a budget. you can use a spreadsheet, budget software, online budget tools, or a pencil and paper. remember, to create a budget, you enter income and calculate the total, enter the expenses and calculate the total, and subtract the expenses from the income. step two: it is now the next month, may. the spencers have spent money and earned another month's worth of income. update your budget with the following expenses in may. keep the original expenses. expenses may short-term savings $0 long-term savings $0 rent/insurance $700 car payment $350 utilities $140 tv/cable $100 cell phones $100 clothing $230 entertainment/recreation/eating out $260 credit card (balance=$1200) $50 miscellaneous expenses $130 in what areas did the spencers overspend? what changes would you make to their spending? step three: you probably noticed that the spencer family is not putting money in their savings account. this would be a good idea since their financial goal is to buy a house. make adjustments to the budget so that they have money going into short-term savings.

Zachary company produces commercial gardening equipment. since production is highly automated, the company allocates its overhead costs to product lines using activity-based costing. the costs and cost drivers associated with the four overhead activity cost pools follow: activities unit level batch level product level facility level cost $ 64,800 $ 27,730 $ 15,000 $ 154,000 cost driver 2,400 labor hrs. 47 setups percentage of use 11,000 units production of 780 sets of cutting shears, one of the company’s 20 products, took 240 labor hours and 7 setups and consumed 15 percent of the product-sustaining activities. required: (a) had the company used labor hours as a company wide allocation base, how much overhead would it have allocated to the cutting shears? (b) how much overhead is allocated to the cutting shears using activity-based costing? (c) compute the overhead cost per unit for cutting shears first using activity-based costing and then using direct labor hours for allocation if 780 units are produced. if direct product costs are $150 and the product is priced at 30 percent above cost for what price would the product sell under each allocation system? (d) assuming that activity-based costing provides a more accurate estimate of cost, indicate whether the cutting shears would be over- or underpriced if direct labor hours are used as an allocation base. explain how over-or undercosting can affect vaulker's profitability. (e) comment on the validity of using the allocated facility-level cost in the pricing decision. should other costs be considered in a cost- plus pricing decision? if so, which ones? what costs would you include if you were trying to decide whether to accept a special order?