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 1 - Sales Budget

Part 3 - Direct Materials Budget

2012

Wood

Fiberglass

Total

Estimated Unit Sales

Material needed for production (units)

Unit Sales Price

Add: target ending inventory

Estimated Dollar Sales

$                               -

= Total Requirements

0

0

Less: beginning inventory

Part 2 - Production Budget

= Budgeted Direct Material Purchases

x Cost per unit of Direct Material

Budgeted Unit Sales

= Cost of Direct Materials Purchases

$                          -

$                       -

$                          -

Add: ending FG inventory

= Total Requirements

0

Part 3A - Direct Materials used

Less: beginning FG inventory

Wood

Fiber Glass

Total

= Units to Produce

0

Beginning Inventory

$                          -

$                       -

Add: Purchases

$                          -

$                       -

Less: Ending Inventory

$                          -

$                       -

= Direct Materials Used

$                          -

$                       -

$                          -

Answer 1

1.

Sales Budget:

	2012
Estimated Unit Sales	1,000
Unit sale price	$450
Estimated dollar sales	$450,000

2.

Production Budget:

Budgeted Unit Sales	1,000
Add: Ending finished goods inventory	200
Total requirements	1,200
Less: Beginning finished goods inventory	-100
Units to produce	1,100

3.

Direct Material Budget:

	Wood	Fiberglass	Total
Material needed for production (units)	5,500 (1,100*5)	6,600 (1,100*6)
Add: Target ending inventory	1,500	2,000
Total requirements	7,000	8,600
Less: Beginning inventory	-2,000	1,000
Budgeted direct material purchases	5,000	7,600
Cost per unit of direct material	$30	$5
Cost of direct material purchases	$150,000	$38,000	$188,000

3A.

Assuming Unit prices for raw materials are same in 2011 and 2012 for the purpose of calculation of beginning raw material inventory.

Direct material used:

	Wood	Fiberglass	Total
Beginning inventory	$60,000 (2000*$30)	$5,000 (1000*$5)
Add: Purchases	150,000	38,000
Less: Ending inventory	-45,000 (1500*$30)	-10,000 (2000*$5)
Direct material used	$165,000	$33,000	$198,000