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: Input Prices Direct materials Cloth $i25 per yard S7.50 per board foot $15 per direct manufacturing labor-hour Wood Direct manufacturing labor Input Ouantities per Unit of Output (per pair of sandals) Regular Deluxe Direct materials 1.5 yards 2 b.f. 7 hours 1.3 yards Cloth Wood Direct manufacturing labor-hours (DMLH) Setup-hours per batch 5 hours 2 hours 3 hours Inventory Information, Direct Materials Cloth Wood Beginning inventory Target ending inventory Cost of beginning inventory 800 b.f. 610 yards 386 yards $3,219 295 b.f. $6,000 Tyva accounts for direct materials using a FIFO cost-flow assumption. Sales and Inventory Information, Finished Goods Regular Deluxe Expected sales in units (pairs of sandals) Selling price Target ending inventory in units Beginning inventory in units Beginning inventory in dollars 3,000 2,000 $ 120 $ 195 400 G00 250 650 $23,250 S92,625 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: Denominator Activity Cost Type Manufacturing Setup Processing Inspection Nonmanufacturing Marketing and general administration Shipping Rate $ 18 per setup-hour Direct manufacturing labor-hours (DMLH) $1.80 per DMLH $1.35 per pair Setup-hours Number of pairs of sandals Sales revenue Number of shipments 8% $ 15 per shipment