In: Accounting
No explanation needed.
Inc. makes and sells a single snowboard model, the Titan. Fullerton’s CEO expects to sell 3,910 snowboards at an estimated retail price of $1,320 per board during 2018. In the fall of 2017, Fullerton gathered the following data to prepare budgets for 2018:
Materials and Labor Requirements |
|
Wood |
17 board feet (b.f.) per snowboard |
Fiberglass |
15 yards per snowboard |
Direct labor |
7 hours per snowboard |
CEO expects to sell 3,910 snowboards during 2018 at an estimated retail price of
$ 1,320 per board. Further, the CEO expects 2018 beginning inventory of 700 snowboards and would like to end 2018 with 900 snowboards in stock. The inventoriable unit cost for beginning finished goods inventory on January 1, 2018 is $230.00.
Data pertaining to the direct materials inventories are as follows:
Beginning Inventory |
Ending Inventory |
|
Wood |
2,100 b.f. |
1,600 b.f. |
Fiberglass |
1,100 yards |
2,100 yards |
Variable manufacturing overhead is $20 per direct labor-hour. There are also $28,770 in fixed manufacturing overhead cots budgeted for 2018. Both variable and fixed overhead costs are allocated based on direct manufacturing labor-hours.
Other data include the following:
2017 Unit Price |
2018 Unit Price |
|
Wood |
$38.00 per b.f. |
$40.00 per b.f. |
Fiberglass |
$14 per yard |
$15 per yard |
Direct labor |
$34.00 per hour |
$35.00 per hour |
Assume Fullerton uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process in your calculations.
1.What are total finished good units to be produced?
Group of answer choices
4,110
3,710
4,700
3,900
2..What is total cost of direct materials to be used?
Group of answer choices
$3,714,250
$3,352,250
$4,217,500
$4,135,300
3.
What is total cost of direct materials to be purchased?
Group of answer choices
$3,352,550
$4,135,600
$4,218,100
$3,714,550
Solution :
(1) The Answer is (a) 4,110
(2) The Answer is (a) $ 3,714,250.
(3) The Answer is (d) $3,714,550
Working :
(1) Finished Goods to be Produced :
Estimated Units to be Sold | 3,910 Units |
Desired Ending Inventory | 900 Units |
Total Required | 4,810 Units |
Opening Units | 700 Units |
Units to be Produced | 4,110 Units |
(2) Cost of Direct Material Used :
Wood | Fiberglass | |
Total Units to be Produced | 4,110 | 4,110 |
Requirement per Unit | 17 Board Feet | 15 Yards |
Total Requirement in Production | 69,870 Board Feet | 61,650 Yard |
Opening Used | 2,100 Board Feet | 1,100 Yards |
from Purchases | 67,770 Board Feet | 60,550 Yards |
Cost of Material Used | (2,100 * 38) + (67,770 * 40) = $ 2,790,600 | (1,100 * $ 14) + (60,550 * $ 15) = $ 923,650 |
Total Cost of Material Used = $ 2,790,600 + $ 923,650 = $ 3,714,250
(3) Cost of Direct Material Purchased :
Wood | Fiberglass | |
(a) Total Units to be Produced | 4,110 | 4,110 |
(b) Requirement per Unit | 17 Board Feet | 15 Yards |
(c) Total Requirement in Production ( a * b) | 69,870 Board Feet | 61,650 Yard |
(d) Desired Direct Material at the end | 1,600 Board Feet | 2,100 Yards |
(e) Total Requirement | 71,470 Board Feet | 63,750 Yards |
(f) Opening Direct Material | 2,100 Board Feet | 1,100 Yards |
(g) Purchases ( e - f) | 69,370 Board | 62,650 Yards |
(h) Purchases Price | $ 40 | $ 15 |
(i) Purchases Cost ( g * h) | $ 2,774,800 | $ 939,750 |
Total Purchases = $ 2,774,800 + $ 939,750 = $ 3,714,550
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