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 8 - Cost to Manufacture One Snowboard

Part 10 - Cost of Goods Sold Budget

Direct Material Inputs

Beginning Finished Goods Inventory

Wood

Add:

Direct Materials Used

Fiberglass

Direct Labor Added

Direct Labor Inputs

Overhead Applied

Overhead Inputs

Total Manufacturing Costs

$                          -

Total Cost of One Snowboard

$                                               -

Cost of Goods Available for Sale

$                          -

Less:

Ending Finished Goods Inventory

$                          -

Part 9 - Budgeted Ending Inventory for Materials and Finished Goods

= Cost of Goods Sold

$                          -

Cost Per

Units

Unit

Total

Raw Materials

Wood

Fiberglass

Finished Goods

$                                               -

Total

$                                               -

Answer 1

8.

Cost to Manufacture One Snowboard
	Input	Cost per input	Total
Direct material inputs
Wood	5	$30	$150
Fiberglass	6	5	30
Direct labor inputs	5	25	125
Overhead inputs	5	19	95
Total cost of one snowboard			$400

Units produced = 1,000+200-100 = 1,100

Direct labor hours used = 1,100*5 = 5,500 hours

Total overhead cost = ($66,000+5,500*$7) / 5,500 = $19

9.

Budgeted Ending Inventory For Materials and Finished Goods
	Unit	Cost per unit	Total
Raw materials
Wood	1500	$30	$45,000
Fiberglass	2000	5	10,000
Finished goods	200	400	80,000
Total			$135,000

10.

Cost of goods sold budget cannot be calculated as data regarding unit cost of beginning raw material inventory not provided.