Question

Fullerton, 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 is the total direct manufacturing labor costs budget?

a.987,180

b. 882,980

c. 1,006,950

d.908,950

2. What are the total manufacturing overhead costs?

a. 102,970

b. 604,170

c.548,170

d. 110,970

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

a. 1,116,900

b. 965,200

c. 978,300

d. 1,167,300

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

a. 4,369,470

b. 4,508,070

c. 4,319,070

d. 4,521,170

5. What are total finished good units to be produced?

a. 4110

b. 4,700

c. 3,900

d. 3,710

Answer 1

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Fullerton 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

Ans 5- 4,110.