Slopes, Inc., manufactures and sells snowboards. Slopes manufactures a single model, the Pipex. In the summer of 2006, Slopes's management accountant gathered the following data to prepare budgets for 2007:

Materials and labor requirements

Direct materials

Wood .............................. 5 board feet (b.f.) per snowboard

Fiberglass ......................... 6 yards per snowboard

Direct manufacturing labor ..... 5 hours per snowboard

Slopes's CEO expects to sell 1,000 snowboards during 2007 at an estimated retail price of $450 per board. Further, he expects 2007 beginning inventory of 100 boards and would like to end 2007 with 200 snowboards in stock.

Direct materials inventories

Variable manufacturing overhead is $7 per direct manufacturing labor-hour. There are also $66,000 in fixed manufacturing overhead costs budgeted for 2007. Slopes combines both variable and fixed manufacturing overhead into a single rate based on direct manufacturing labor-hours. Variable marketing costs are allocated at the rate of $250 per sales visit. The marketing plan calls for 30 sales visits during 2007. Finally, there are $30,000 in fixed nonmanufacturing costs budgeted for 2007.
Other data includes:

The inventoriable unit cost for ending finished goods inventory on December 31, 2006, is $374.80. Assume Slopes uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process in your calculations.
Budgeted balances at December 31, 2007, in the selected accounts are:
Cash .............................................................. $ 10,000
Property, plant, and equipment (net) ...................... 850,000
Current liabilities ............................................. 17,000
Long-term liabilities ......................................... 178,000
Stockholders' equity ......................................... 800,000
Required
1. Prepare the 2007 revenues budget (in dollars).
2. Prepare the 2007 production budget (in units).
3. Prepare the direct material usage and purchases budgets.
4. Prepare a direct manufacturing labor budget.
5. Prepare a manufacturing overhead budget.
6. What is the budgeted manufacturing overhead rate?
7. What is the budgeted manufacturing overhead cost per output unit?
8. Calculate the cost of a snowboard manufactured in 2007.
9. Prepare an ending inventory budget for both direct materials and finished goods.
10. Prepare a cost of goods sold budget.
11. Prepare the budgeted income statement for Slopes, Inc., for the year ending December 31, 2007.
12. Prepare the budgeted balance sheet for Slopes, Inc., as of December 31, 2007?

Transcribed Image Text:

Beginning Inventory Inventory 1/1/2007 Ending 12/31/2007 1,500 Wood 2,000 1,000 Fiberglass 2,000 2006 Unit Price 2007 Unit Price $28.00 per b.f S 4.80 per yard 5.00 per yard $24.00 per hour $30.00 per b.f Wood Fiberglass Direct manufacturing labor $25.00 per hour