Question
In: Accounting
Chp 22 Test Review Black Diamond Company produces snow skis. Each ski requires 1 pounds of...
Chp 22 Test Review
Black Diamond Company produces snow skis. Each ski requires 1 pounds of carbon fiber. The company’s management predicts that 6,500 skis and 7,500 pounds of carbon fiber will be in inventory on June 30 of the current year and that 165,000 skis will be sold during the next (third) quarter. A set of two skis sells for $450. Management wants to end the third quarter with 5,000 skis and 5,500 pounds of carbon fiber in inventory. Carbon fiber can be purchased for $14 per pound. Each ski requires 0.5 hours of direct labor at $19 per hour. Variable overhead is applied at the rate of $9 per direct labor hour. The company budgets fixed overhead of $1,797,000 for the quarter.
Required:
1. Prepare the third-quarter production budget for
skis.
|
|||||||||||||||||
2. Prepare the third-quarter direct materials
(carbon fiber) budget; include the dollar cost of
purchases.
|
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3. Prepare the direct labor budget for the third quarter.
|
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4. Prepare the factory overhead budget for the third quarter.
|
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Solutions
Expert Solution
| Production budget- 3rd Quarter | |
| Budgeted sales units | 165000 |
| Add: Desired ending inventory | 5000 |
| Unit need to be Produced | 170000 |
| Less: Beginning inventory | -6500 |
| Budgeted Production | 163500 |
| Carbon Fibre Purchase material purchase Budget | |
| Production units | 163500 |
| Pound required per Unit | 1 |
| Total Material Required for required Production | 163500 |
| Add: Desired ending inventory | 5500 |
| Total materials required in Pound | 169000 |
| Less: Beginning inventory | -7500 |
| Total purchase to be made (a) | 161500 |
| Raw material cost per pound (b) | $14.00 |
| Total cost of direct materials purchases aXb) | $2,261,000.00 |
| Direct Labour Budget- third Quarter | |
| Production units (a) | 163500 |
| Hour Required per Unit (b) | 0.5 |
| Total direct labor hours (c=aXb) | 81750 |
| Hourly Rate (d) | $19.00 |
| Direct Labour Cost (cXd) | $1,553,250.00 |
| Factory Overhead Budget - Black Diamond Company | |
| Labour Hour Require (a) | 81750 |
| Variable overhead rate per hour (b) | $9.00 |
| Budgeted variable overhead (c=aXb) | $735,750.00 |
| Budgeted fixed overhead (d) | $1,797,000.00 |
| Total Factory Overhead (c+d) | $2,532,750.00 |
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