Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

6-37 Comprehensive operating budget, budgeted balance sheet. Skulas, Inc., manufactures and sells snowboards. Skulas manufactures a single model, the Pipex. In the summer of 2014,

6-37 Comprehensive operating budget, budgeted balance sheet. Skulas, Inc., manufactures and sells

snowboards. Skulas manufactures a single model, the Pipex. In the summer of 2014, Skulas management

accountant gathered the following data to prepare budgets for 2015:

Materials and Labor Requirements

Direct materials

Wood 9 board feet (b.f.) per snowboard

Fiberglass 10 yards per snowboard

Direct manufacturing labor 5 hours per snowboard

Skulas CEO expects to sell 2,900 snowboards during 2015 at an estimated retail price of $650 per board.

Further, the CEO expects 2015 beginning inventory of 500 snowboards and would like to end 2015 with 200

snowboards in stock.

Required

Required

ASSIGNMENT MATERIAL 241

Direct Materials Inventories

Beginning Inventory 1/1/2015 Ending Inventory 12/31/2015

Wood 2,040 b.f. 1,540 b.f.

Fiberglass 1,040 yards 2,040 yards

Variable manufacturing overhead is $7 per direct manufacturing labor-hour. There are also $81,000 in fixed

manufacturing overhead costs budgeted for 2015. Skulas combines both variable and fixed manufactur-

ing 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 38 sales visits during 2015. Finally,

there are $35,000 in fixed nonmanufacturing costs budgeted for 2015.

Other data include:

2014

Unit Price

2015

Unit Price

Wood $32.00 per b.f. $34.00 per b.f.

Fiberglass $ 8.00 per yard $ 9.00 per yard

Direct manufacturing labor $28.00 per hour $29.00 per hour

The inventoriable unit cost for ending finished goods inventory on December 31, 2014, is $374.80. Assume

Skulas uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process

in your calculations.

Budgeted balances at December 31, 2014, in the selected accounts are as follows:

Cash $ 14,000

Property, plant, and equipment (net) 854,000

Current liabilities 21,000

Long-term liabilities 182,000

Stockholders equity 857,120

1. Prepare the 2015 revenues budget (in dollars).

2. Prepare the 2015 production budget (in units).

3. Prepare the direct material usage and purchases budgets for 2015.

4. Prepare a direct manufacturing labor budget for 2015.

5. Prepare a manufacturing overhead budget for 2015.

6. What is the budgeted manufacturing overhead rate for 2015?

7. What is the budgeted manufacturing overhead cost per output unit in 2015?

8. Calculate the cost of a snowboard manufactured in 2015.

9. Prepare an ending inventory budget for both direct materials and finished goods for 2015.

10. Prepare a cost of goods sold budget for 2015.

11. Prepare the budgeted income statement for Skulas, Inc., for the year ending December 31, 2015.

12. Prepare the budgeted balance sheet for Skulas, Inc., as of December 31, 2015.

13. What questions might the CEO ask the management team when reviewing the budget? Should the CEO

set stretch targets? Explain briefly.

14. How does preparing the budget help Skulas management team better manage the company?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Auditing That Matters Case Studies

Authors: Norman David Marks

1st Edition

B089J17FFW, 979-8650160410

More Books

Students also viewed these Accounting questions

Question

10 What took its place?

Answered: 1 week ago

Question

Explain the trade life cycle for call options.

Answered: 1 week ago

Question

What do you mean by dual mode operation?

Answered: 1 week ago

Question

Explain the difference between `==` and `===` in JavaScript.

Answered: 1 week ago

Question

Factors Affecting Conflict

Answered: 1 week ago

Question

Describe the factors that lead to productive conflict

Answered: 1 week ago

Question

Understanding Conflict Conflict Triggers

Answered: 1 week ago