Question

1 Required information [The following information applies to the questions displayed below.] Black Diamond Company produces snow skis. Each ski requires 3 pounds of carbon fiber. The company's management predicts that 6,300 skis and 7,300 pounds of carbon fiber will be in inventory on June 30 of the current year and that 163,000 skis will be sold during the next (third) quarter. A set of two skis sells for $430. Management wants to end the third quarter with 4,800 skis and 5,300 pounds of carbon fiber in inventory. Carbon fiber can be purchased for $12 per pound. Each ski requires 0.4 hours of direct labor at $17 per hour. Variable overhead is applied at the rate of $7 per direct labor hour. The company budgets fixed overhead of $1,795,000 for the quarter. Part 1 of 4 Required: 1. Prepare the third-quarter production budget for skis. BLACK DIAMOND COMPANY Production Budget (in units) Third Quarter Required units of available production Units to be manufactured

Answer 1

Solution:

G H Black Diamond Company Production Budget (in units) Third Quarter Estimated unit sales Plus: Desired ending inventory of skis Required units of available production Less: Beginning inventory of skis Units to be manufactured 163000 4800 167800 6300 161500 13 14 15 161500 Black Diamond Company Direct materials budget Third Quarter Budgeted production * Pounds required per unit Materials needed for production (lbs) Add: estimated ending inventory of direct materials (lbs) Total materials requirements (lbs) Less: Beginning inventory of direct materials (lbs) Direct materials to be purchased (lbs) *cost per pound of direct materials Budgeted cost of direct materials purchases 20 21 22 484500 5300 489800 7300 482500 $12 $5,790,000 23 24 26 Black Diamond Company Direct Labor Budget Third Quarter Units to be produced *labor hour per unit Total Labor Hours Needed * Direct labor rate per hour Budgeted Direct labor cost 161500 0.4 64600 $17 $1,098,200 34 35 36 Black Diamond Company Factory Overhead Budget Third Quarter Total Labor Hours Needed Variable Overhead rate Total Variable overhead Add: Fixed Overhead Total factory Overhead 64600 $7 $452,2001 $1,795,000 $2,247,200 44 45 46 et986 Sheet399 (3) Sheet424 (5) Sheet1074 Sheet989