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 11 - Budgeted Income Statement
	Sales Revenue
	Less: Cost of Goods Sold
	= Gross Profit					$                               -
	Less: Operating Expenses
		Variable marketing costs
		Fixed non-manufacturing costs				$                               -
	=Operating Income					$                               -
	Part 12 - Budgeted Balance Sheet
	Cash			Current Liabilities
	Inventory			Long-Term Liabilities
	PPE			Capital Stock
				Retained Earnings
	Total Assets	$                                  -		Total Liabilities & Equity		$                               -

Answer 1

Answer is given below

Closing inventory of Finished Goods is valued as per $374.80 given in question.

1,000 Sales Budget Sales Unit Selling price Budgeted Sales $450 $450,000 2 Production Budget Budgeted Sales Add: Closing stock Total Needs Less: Opening stock Budgeted production 1,000 200 1,200 100 1,100 5,500 1,500 7,000 Direct Material Budget-Wood Wood needed for production Add: Closing stock Total Need Less: Opening stock Budgeted Purchase (Units) Purchase price Budgeted Purchased (Value) 2,000 5,000 $30 $150,000 Direct Material Budget (Fibre glass) Fibre glass needed for production Add: Closing stock Total Need Less: Opening stock Budgeted Purchase (Units) Purchase price Budgeted Purchased (Value) 6,600 2,000 8,600 1,000 7,600 $38,000 1,100 Direct Labor Budget Budgeted production Direct Labor hour per unit Total Direct Labor hour Direct Labor hour rate Direct Labor cost 5,500 $25 $137,500 5 5,500 Manufacturing Overhead budget Budgeted Labor hours Variable overhead rate per DL Total Variable Overhead Fixed Overhead Manufacturing Overhead budget $38,500 $66,000 $104,500 Predetermined overhead rate Manufacturing Overhead budget Total Direct labor hours Predetermined overhead rate $104,500 5,500 $19 $19 Overhead to be applied to one snowboard Predetermined overhead rate Direct Labor hours Overhead applied $95 8 Cost to manufacture a snowbird Direct Material Wood Fiberglas Direct Labor Manufacturing Overhead Total Product cost per unit $150 $30 $125 $95 $400 Budgeting Ending Inventory Raw Materials Wood Fibre glass Total Raw material inventory Finished Goods $45,000 $10,000 $55,000 $80,000 $37,480 Cost of Goods sold Opening Inventory Direct material consumed $198,000 Direct Labor $137,500 Manufacturing overhead $104,500 Cost of Goods available for sale Less: Closing inventory Cost of Goods Sold $440,000 $477,480 $80,000 $397,480 Budgeted Income Statement Sales Revenue $450,000 Less: Cost of Goods Sold $397,480 Gross profit $52,520 Less: Operating Expenses Variable marketing cost $7,500 Fixed non manufacturing costs $30,000 Operating Income $15,020 Budgeted Balance Sheet $10,000 Current Liabilities Cash $17,000 Inventory Raw materials Finished goods PPE $55,000 Long term liabilities $80,000 Capital Stock $850,000 Retained earnings $178,000 $600,000 $200,000 $995,000 $995,000 Retained Earnings Opening Balance Net Income during the year Closing balance $184,980 $15,020 $200,000

Sales Budget Sales Unit Selling price Budgeted Sales 1,000 $450 $450,000 2 Production Budget Budgeted Sales Add: Closing stock Total Needs Less: Opening stock Budgeted production 1,000 200 1,200 100 1,100 5,500 1,500 7,000 Direct Material Budget-Wood Wood needed for production Add: Closing stock Total Need Less: Opening stock Budgeted Purchase (Units) Purchase price Budgeted Purchased (Value) 2,000 5,000 $30 $150,000 Direct Material Budget (Fibre glass) Fibre glass needed for production Add: Closing stock Total Need Less: Opening stock Budgeted Purchase (Units) Purchase price Budgeted Purchased (Value) 6,600 2,000 8,600 1,000 7,600 $38,000 4 1,100 Direct Labor Budget Budgeted production Direct Labor hour per unit Total Direct Labor hour Direct Labor hour rate Direct Labor cost 5,500 $25 $137,500 5 5,500 Manufacturing Overhead budget Budgeted Labor hours Variable overhead rate per DL Total Variable Overhead Fixed Overhead Manufacturing Overhead budget $38,500 $66,000 $104,500 Predetermined overhead rate Manufacturing Overhead budget Total Direct labor hours Predetermined overhead rate $104,500 5,500 $19 7 $19 Overhead to be applied to one snowboard Predetermined overhead rate Direct Labor hours Overhead applied $95 8 Cost to manufacture a snowbird Direct Material Wood Fiberglas Direct Labor Manufacturing Overhead Total Product cost per unit $150 $30 $125 $95 $400 Budgeting Ending Inventory Raw Materials Wood Fibre glass Total Raw material inventory Finished Goods $45,000 $10,000 $55,000 $74,960 $37,480 Cost of Goods sold Opening Inventory Direct material consumed $198,000 Direct Labor $137,500 Manufacturing overhead $104,500 Cost of Goods available for sale Less: Closing inventory Cost of Goods Sold $440,000 $477,480 $74,960 $402,520 11 Budgeted Income Statement Sales Revenue $450,000 Less: Cost of Goods Sold $402,520 Gross profit $47,480 Less: Operating Expenses Variable marketing cost $7,500 Fixed non manufacturing costs $30,000 Operating Income $9,980 12 Budgeted Balance Sheet $10,000 Current Liabilities Cash $17,000 Inventory Raw materials Finished goods PPE $55,000 Long term liabilities $74,960 Capital Stock $850,000 Retained earnings $178,000 $600,000 $194,960 $989,960 $989,960 Retained Earnings Opening Balance Net Income during the year Closing balance $184,980 $9,980 $194,960