Question

In: Accounting

ullerton, Inc. makes and sells a single snowboard model, the Titan. Fullerton’s CEO expects to sell...

ullerton, 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.

What is the budgeted cost of goods sold for 2018?

Group of answer choices

$4,521,170

$4,369,470

$4,508,070

$4,319,070

Solutions

Expert Solution

Answer: $4,319,070

Explanation:

Units Produced:

Budgeted selling units 3910
Desired ending units 900
Total units required 4810
Less: Opening units 700
Units to be Produced 4110

Cost of materials:

Particulars Wood Fiberglass
Units to be Produced 4110 4110
Material req per unit 17 15
material req for production 69870 61650
Beginning material 2100 1100
Cost $38 $14
Total cost $79,800 $15,400
Purchased material 67770 60550
Cost $40 $15
Total cost $2,710,800 $908,250
cost of materials used $2,790,600 $923,650

Cost of finished goods:

Cost per unit
wood 17x40 $680
Fiberglass 15x15 $225
Labor 7x35 $245
Variable MOH 7x20 $140
Fixed MOH 1x7 $7
Total $1,297
Ending units 900
Total cost of ending units $1,167,300

cost of goods sold:

Total cost of Goods Produced
Wood $2,790,600
Fiber glass $923,650
Labor(245x4110) $1,006,950
Variable MOH(140x4110) $575,400
Fixed MOH $28,770
Total cost of Goods Produced $5,325,370
Less: cost of ending inventory $1,167,300
Cost of goods sold from production $4,158,070
Add: Opening inventory(700x230) $161,000
Total cost of goods sold $4,319,070

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