Question

In: Accounting

No explanation needed. Inc. makes and sells a single snowboard model, the Titan. Fullerton’s CEO expects...

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

1.What is the total direct manufacturing labor costs budget?

Group of answer choices

$1,006,950

$882,980

$908,950

$978,180

2.What are total manufacturing overhead costs?

Group of answer choices

$604,170

$548,170

$110,970

$102,970

3.What is the cost of target ending inventories of finished goods?

Group of answer choices

$965,200

$1,167,300

$978,300

$1,116,900

4.What is the budgeted cost of goods sold for 2018?

Group of answer choices

$4,369,470

$4,508,070

$4,319,070

$4,521,170

Solutions

Expert Solution

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Inc. makes
Production Budget Note
Sales (units)            3,910.00 A
Add: Desired Ending Inventory               900.00 B
Total needed           4,810.00 C=A+B
Less: Expected Beginning Inventory               700.00 D
Production Budget           4,110.00 E=C-D
Ans 1 - Direct Labor Budget Amount $
Production Budget            4,110.00 See E
Labor hour required per unit                   7.00 F
Labor hour needed for production         28,770.00 G=F*E
Labor rate per hour                 35.00 H
Direct Labor Budget 1,006,950.00 I=G*H
Ans 2 - Manufacturing overhead costs Amount $
Labor hour needed for production         28,770.00 See G
Variable Overhead rate per hour                 20.00 J
Variable Overhead Budget       575,400.00 K=G*J
Fixed Overhead Budget         28,770.00 L
Total Manufacturing overhead costs       604,170.00 M=K+L
Workings for Ans 3 Amount $
Total Manufacturing overhead costs       604,170.00 See M
Labor hour needed for production         28,770.00 See G
Overhead absorption rate                 21.00 N=M/G
Ans 3- Finished goods Inventory Wood Fiber Glass Labor Overhead Amount $ Note
Ending Finished goods Inventory units               900.00                900.00               900.00           900.00 O
Input per unit                 17.00                  15.00                   7.00                7.00 P
Rate per unit of Input                 40.00                  15.00                 35.00             21.00 Q
Total       612,000.00        202,500.00       220,500.00 132,300.00 1,167,300.00 R=O*P*Q
Ans 4- Cost of goods sold
$4,521,170

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