Question

Business 1B - Managerial Accounting - Master Budget Comprehensive Project

Radical Boards, Inc. manufactures and sells a single model

The unit cost for ending FG inventory at 12/31/11 was $374.80.

of snowboard, the Vortex. In the summer of 2011,

Ignore Work In Process

Iggy Sawdust, CPA, provided data for the 2012 budget:

Direct Material Requirements (per snowboard)

The December 2012 Budget Includes the following selected balances:

Wood

5 board feet (b.f.)

Cash

$      10,000.00

Fiberglass

6 yards

Property, Plant, and Equipment

$   850,000.00

Direct Labor Requirements

5 hours

Current Liabilities

$      17,000.00

Long Term Liabilities

$   178,000.00

Expected sales during 2012 - 1000 units at $450 per unit

Capital Stock

$   600,000.00

Expected inventory balances:

1/1/12

12/31/12

Finished Goods

100

200

Retained Earnings at balance at 12/31/11

$   184,980.00

Wood Raw Material

2000 b.f.

1500 b.f.

Fiberglass Raw Material

1000 yards

2000 yards

Required: Prepare the following reports for the year 2012

Other data:

Unit Prices

1

Sales Budget in dollars

Wood

$30.00 per b.f.

2

Production Budget in units

Fiberglass

$5.00 per yard

3

Direct Materials Budget

Direct labor

$25.00 per hour

4

Direct Labor Budget

5

Manufacturing Overhead Budget

Variable Overhead

$7.00 per dlh

6

Predetermined Overhead Rate

Fixed Overhead

$66,000

7

Estimated Overhead to be Applied to One Snowboard

Overhead Driver

DL Hours

8

Calculate the cost to manufacture a snowboard

9

Budgeted Ending Inventory for Materials and Finished Goods

Variable marketing costs

$250 per sales visits

10

Cost of Goods Sold Budget

Expected sales visits in 2012

30

11

Budgeted Income Statement

Fixed non-overhead costs

$30,000

12

Budgeted Balance Sheet

1) I advise doing all of the calculations by hand before you input numbers in the work sheets.

2) Fill in the hatched boxes ONLY.  Some inputs are just numbers.  Some require calculations.  The rest of the cells calculate automatically.

3) Clarification: The balance sheet numbers above are as of the end of year, i.e. all you have to do is determine year-end retained earnings.

Part 4 - Direct Labor Budget

Part 6 - POHR

Units to Produce

Total Overhead

$                           -

x Direct Labor Hours Per Unit

/ Expected Units in Activity Base

= Total Direct Labor Hours

= POHR (per Direct Labor Hour)

#DIV/0!

x Direct Labor Rate

= Direct Labor Cost

Part 5 - Overhead Budget

Part 7 - Overhead Cost Applied to One Snowboard

Variable Manufacturing Overhead

# of DL Hours to Produce One Snowboard

Fixed Manufacturing Overhead

x POHR

#DIV/0!

Total Overhead

$                          -

= Overhead Cost in One Snowboard

#DIV/0!

Answer 1

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4. Direct Manufacturing Labor Budget:
		Finished Goods
Budgeted Production		1100
Labor Hour per unit of Production		5
Total budgeted Hours needed		5500
Labor cost per hour		$                            25
Total Direct Labor		$                 137,500
5. Manufacturing Overhead Budget:
		Finished Goods
Budgeted Labor Hours		5500
Per Hour Cost		$                        7.00
Variable Manufacturing Overhead	$ 7*5500	$                    38,500
Fixed Manufacturing Overhead		$                    66,000
Total Budgeted Manufacturing Overhead		$                 104,500
6. Predetermined Overhead Rate
Total Budgeted Manufacturing Overhead		$                 104,500
Total budgeted Hours needed		5,500
Budgeted Overhead Rate	104500/5500	$                      19.00
7. Budgeted Manufacturing overhead cost per unit
Labor hours for one snowboard		5.00
Budgeted Overhead Rate		$                      19.00
Budgeted Manufacturing overhead cost per unit		$                            95