Skors, Inc., manufactures and sells snowboards. Skors,manufactures a single model, the Pipex. In the summer of 2014, Skors management accountant gathered the following data to prepare budgets for 2015:

Materials and Labor Requirements

Direct materials

Wood 12 board feet (b.f.) per snowboard

Fiberglass 10 yards per snowboard

Direct manufacturing labor 6 hours per snowboard

Skors CEO expects to sell 3,100 snowboards during 2015 at an estimated retail price of $850 per board. Further, the CEO expects 2015 beginning inventory of 600 snowboards and would like to end 2015 with 700 snowboards in stock.

Direct Materials Inventories
	Beginning Inventory 1/1/2015		Ending Inventory 12/31/2015
Wood	2,050	b.f.	1,550	b.f.
Fiberglass	1,050	yards	2,050	yards

Variable manufacturing overhead is $15 per direct manufacturing labor-hour. There are also $19,200 in fixed manufacturing overhead costs budgeted for 2015. Skors 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 $300 per sales visit. The marketing plan calls for 39 sales visits during 2015. Finally there are $36,000 in fixed nonmanufacturing costs budgeted for 2015.

2014 Unit Price 2015 Unit Price

Wood $33.00 per b.f. $35.00 per b.f.

Fiberglass $9.00 per yard $10.00 per yard

Direct manufacturing labor $29.00 per hour $30.00 per hour

Budgeted balances at December 31, 2015, in the selected accounts are as follows:

Cash

$15,000

Property, plant, and equipment (net)

855,000

Current liabilities

22,000

Long-term liabilities

183,000

Stockholders' equity

1,296,950

6.	What is the budgeted manufacturing overhead rate for 20152015?
7.	What is the budgeted manufacturing overhead cost per output unit in 20152015?
8.	Calculate the cost of a snowboard manufactured in 20152015.
9.	Prepare an ending inventory budget for both direct materials and finished goods for 20152015.
10.	Prepare a cost of goods sold budget for 20152015.
11.	Prepare the budgeted income statement for SkorsSkors, Inc., for the year ending December 31, 20152015.
12.	Prepare the budgeted balance sheet for SkorsSkors, Inc., as of December 31, 20152015.
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 SkorsSkors' management team better manage the company?

Requirement 6. What is the budgeted manufacturing overhead rate for

20152015?

Begin by determining the formula, then enter the appropriate amounts to calculate the budgeted manufacturing overhead rate for

20152015.

(Abbreviation used: Manuf. = Manufacturing. Round the overhead rate to the nearest cent.)

	/		=	Budgeted manufacturing overhead rate
	/		=

Requirement 7. What is the budgeted manufacturing overhead cost per output unit in 2015? Begin by determining the formula, then enter the appropriate amounts to calculate the budgeted manufacturing overhead cost per output unit in 2015.

(Abbreviation used: Manuf. = Manufacturing)

				Budgeted manuf. overhead
	/		=	cost per output unit
	/		=

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

Unit Costs of Manufacturing Finished Goods
December 31, 2015
	Cost per	Input per
	unit	unit
	of input	of output		Total
Direct materials
Wood		12	f.b.
Fiberglass		10	yds.
Direct manufacturing labor		6	hrs.
Budgeted manufacturing overhead cost
Total

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

Ending Inventories Budget
December 31, 2015
	Quantity		Cost per unit		Total
Direct materials
Wood	1,550
Fiberglass	2,050
Finished goods
Snowboard	700
Total ending inventory

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

Cost of Goods Sold Budget
For the Year Ended December 31, 2015
Beginning finished goods inventory, January 1
Direct materials used
Direct manufacturing labor
Manufacturing overhead
Cost of goods manufactured
Cost of goods available for sale
Deduct ending finished goods inventory, December 31
Cost of goods sold

Requirement 11. Prepare the budgeted income statement for

SkorsSkors,

Inc., for the year ending December 31, 2015.

Budgeted Income Statement
For the Year Ended December 31, 2015
Revenues
Cost of goods sold
Gross margin
Operating (nonmanufacturing) costs
Operating income

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

Budgeted Balance Sheet
December 31, 2015
Cash	$15,000
Inventory
Property, plant and equipment (net)	855,000
Total assets
Current liabilities	$22,000
Long-term liabilities	183,000
Stockholders equity	1,296,950
Total liabilities and stockholders equity

Requirement 13. What questions might the CEO ask the management team when reviewing the budget? Should the CEO set stretch targets? Explain briefly.

First, select the questions that the CEO might ask the marketing manager. (Select all that apply.)

Now, select the questions that the CEO might ask the production manager. (Select all that apply.)

Should the CEO set stretch targets? Explain briefly.

The CEO

should not set stretch targets

should set stretch targets that are challenging but achievable

because: (Select all that apply.)

Requirement 14. How does preparing the budget help

SkorsSkors'

management team better manage the company?

Preparing a budget helps

SkorsSkors,

Inc.: (Select all that apply.)