Question

Required information Problem 22-1A Manufacturing: Preparing production and manufacturing budgets LO C2, P1 IThe following information applies to the questions displayed belowJ Black Diamond Company produces snow skis. Each ski requires 2 pounds of carbon fiber. The company's management predicts that 5,600 skis and 6,600 pounds of carbon fiber will be in inventory on June 30 of the current year and that 156,000 skis will be sold during the next (third) quarter. A set of two skis sells for $360. Management wants to end the third quarter with 4,100 skis and 4,600 pounds of carbon fiber in inventory. Carbon fiber can be purchased for $21 per pound. Each ski requires 0.5 hours of direct labor at $26 per hour. Varlable overhead is applied at the rate of $14 per direct labor hour. The company budgets fixed overhead of $1,788,000 for the quarter. Problem 22-1A Part 3 3. Prepare the direct labor budget for the third quarter. BLACK DIAMOND COMPANY Direct Labor Budget Third Quarter Units to be produced Total labor hours needed Budgeted direct labor cost

Answer 1

Direct labour budget :

Sales in third quarter	156000
Add; Desired ending inventory	4100
Total needs	160100
Less; Beginning inventory	(5600)
Production units	154500
Labour hour per unit	0.50
Production hour	77250
Rate per hour	26
Budgeted direct labour cost	2008500