Slopes, Inc., manufactures and sells snowboards. Slopes manufactures a single model, The Pipe-X. In the summer of 2011, Slope's management accountant gathered the following data to prepare budgets for 2012:
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Materials and labor requirements
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Direct materials
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Wood
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5 board feet (b.f.) per snowboard
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Fiberglass
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6 yards per snowboard
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Direct Manufacturing Labor
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5 hours per snowboard
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Slope's CEO expects to sell 1,000 snowboards during 2012 at an estimated retail price of $450 per board. Further, the CEO expects 2012 beginning inventory of 100 snowboards and would like to end 2012 with 200 snowboards in stock.
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Direct material inventory
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Beginning inventory, 1/1/2012
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Ending inventory 31/12,2012
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Wood
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2,000 b.f.
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1,500 b.f.
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Fiberglass
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1,000 yards
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2,000 yards
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Variable Manufacturing Overhead is $7 per Direct Manufacturing Labor Hour. There are also $66,000 in Fixed Manufacturing Overhead Costs budgeted for 2012. Slopes combines both variable and fixed manufacturing overhead into a single rate based on Direct Manufacturing Labor Hours.
Variable Marketing Costs are allocated at the rate of $250 per sales visit. The marketing plan calls for 30 sales visits to stores during 2012. Finally, there are $30,000 in fixed manufacturing costs budgeted for 2012.
Other data includes the following;
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2011 Unit Price
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2012 Unit Price
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Wood
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$28 per b.f.
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$30 per b.f.
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Fiberglass
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$4.80 per yard
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$5.00 per yard
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Direct Manufacturing Labor
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$24 per hour
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$25 per hour
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The cost unit for ending finished goods inventory on 31/12/2011 is $374.80 per unit.
Assume Slope uses the FIFO method inventory for both direct materials and finished goods.
Ignore work in process in your calculations.
Budgeted balances at 31/12/2012 in selected accounts:
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Cash
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$10,000
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Property, Plant & Equipment, net
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$850,000
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Current Liabilities
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$17,000
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Long-term Liabilities
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$178,000
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Stockholders' Equity
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$800,000
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Required:
1.Prepare the 2012 Revenues Budget (in dollars).
2.Prepare the 2012 Production Budget (in units).
3.Prepare the Direct Material Usage and Purchases Budget for 2012.
4.Prepare a Direct Manufacturing Labor Budget for 2013.
5.Prepare a Manufacturing Overhead Budget for 2012.
6.What is the Budgeted Manufacturing Overhead Rate for 2012.
Required continued on next page.
7.What is the Budgeted Manufacturing Overhead Cost per output unit in 2012.
8.Calculate the cost of one snowboard manufactured in 2012.
9.Prepare an Ending Inventory Budget for both Direct Materials and Finished Goods for 2012.
10.Prepare a Cost of Goods Sold Budget for 2012.
11.Prepare the Budgeted Income Statement for Slopes Inc. For the year 2012.
12.Prepare the Budgeted Balance Sheet for Slopes Inc. for the year ending 31/12/2012.