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Required information (The following information applies to the questions displayed below.] Black Diamond Company produces snow skis. Each ski requires 2 pounds of carbon fiber.
Required information (The following information applies to the questions displayed below.] Black Diamond Company produces snow skis. Each ski requires 2 pounds of carbon fiber. The company's management predicts that 6,400 skis and 7,400 pounds of carbon fiber will be in inventory on June 30 of the current year and that 164,000 skis will be sold during the next (third) quarter. A set of two skis sells for $440. Management wants to end the third quarter with 4,900 skis and 5,400 pounds of carbon fiber in inventory. Carbon fiber can be purchased for $13 per pound. Each ski requires 0.5 hours of direct labor at $18 per hour. Variable overhead is applied at the rate of $8 per direct labor hour. The company budgets fixed overhead of $1,796,000 for the quarter. 4. Prepare the factory overhead budget for the third quarter. 81,250 BLACK DIAMOND COMPANY Factory Overhead Budget Third Quarter Total labor hours needed Variable overhead rate per DL hour $ Budgeted variable overhead $ Budgeted fixed overhead Budgeted total overhead $ 8 650,000 1,796,000 2,446,000
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