Sloane, Inc., manufactures and sells snowboards. Sloane manufactures a single model, the Pipex. In the summer of 2017, Sloane's management accountant gathered the following data to prepare budgets for 2018:
Materials and Labour Requirements Direct materials Wood 9 board feet (b.f.) per snowboard
Fiberglass 10 yards per snowboard
Direct manufacturing labor 5 hours per snowboard
Sloane's CEO expects to sell 2,900 snowboards during 2018 at an estimated retail price of $650 per board. Further, the CEO expects 2018 beginning an inventory of 500 snowboards and would like to end 2018 with 200 snowboards in stock.
Direct Materials Inventories
Beginning Inventory 1/1/2018 Ending Inventory 12/31/2018
Wood 2,040 b.f. 1,540 b.f
Fiberglass 1,040 yards 2,040 yards
Variable manufacturing overhead is $7 per direct manufacturing labor-hour. There are also $80,600 in fixed manufacturing overhead costs budgeted for 2018. Sloane combines both variable and fixed manufacturing overhead into a single rate based on direct manufacturing labor-hours. Variable marketing costs are allocated at a rate of $250 per sales visit. The marketing plan calls for 38 sales visits in 2018. Finally, there are $35,000 in fixed nonmanufacturing costs budgeted for 2018.
Other data include:
Direct Materials Inventories
2017 (Unit Price) 2018 (Unit Price)
Wood $32.00 per b.f $34.00 per b.f
Fiberglass 8.00 per yard $9.00 per yard
Direct manufacturing labor $28.00 per hour $29.00 per hour
The inventoriable unit cost for ending finished goods inventory on December 31, 2017, is $374.80.
Assume Sloane uses a FIFO inventory method for both direct materials and finished goods.
Budgeted balances on December 31, 2017, in the selected accounts are as follows:
Cash $14,000
Property, Plant, and equipment (net) 854,000
Current liabilities 21,000
Long-term liabilities 182,000
Stockholders? equity 857,120
Required:
1. Prepare the 2018 sales budget.
2. Prepare the 2018 production budget.
3. Prepare the direct material usage and purchase budgets for 2018.
4. Prepare a direct manufacturing labor budget for 2018.
5. Prepare a manufacturing overhead budget for 2018.
6. What is the budgeted manufacturing overhead rate for 2018?
7. What is the budget manufacturing overhead cost per output unit in 2018?
8. Calculate the cost of a snowboard manufactured in 2018.
9. Calculate the ending inventory budget for finished goods for 2018.