Slatts, Inc., manufactures and sells snowboards. Slatts manufactures a single model, the Pipex. In the summer of 2011, Slatts' management accountant gathered the following data to prepare budgets for 2012:

Materials and Labor Requirements

Direct materials:

Wood 13 board feet (b.f.) per snowboard

Fiberglass 11 yards per snowboard

Direct manufacturing labor 7 hours per snowboard

Slatts' management expects to sell 3,400 snowboards during 2012 at an estimated retail price of $1,000

per board. Furthermore, the CEO expects 2012 beginning inventory of 700 snowboards and would like to end 2012 with 800 snowboards in stock.

Direct Materials Inventories
	Beginning Inventory 1/1/2012		Ending Inventory 12/31/2012
Wood	2,060	b.f.	1,560	b.f.
Fiberglass	1,060	yards	2,060	yards

Variable manufacturing overhead is $16 per direct manufacturing labor-hour. There are also $98,000 in fixed manufacturing overhead costs budgeted for 2012. Slatts 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 $310 per sales visit. The marketing plan calls for 40 sales visits during 2012. Finally, there are $37,000 in fixed nonmanufacturing costs budgeted for 2012.

2011 Unit Price 2012 Unit Price

Wood $34.00per b.f. $36.00per b.f.

Fiberglass $10.00per yard $11.00per yard

Direct manufacturing labor $30.00per hour $31.00per hour

The inventoriable unit cost for ending finished goods inventory on December 31, 2011, is $200.00.

Assume Slatts uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process in your calculations.

REQUIRED

1.	Prepare the 2012 revenues budget (in dollars).
2.	Prepare the 2012 production budget (in units).
3.	Prepare the direct material usage and purchases budgets for 2012.
4.	Prepare a direct manufacturing labor budget for 2012.
5.	Prepare a manufacturing overhead budget for 2012.
6.	What is the budgeted manufacturing overhead rate for 2012?
7.	What is the budgeted manufacturing overhead cost per output unit in 2012?
8.	Calculate the cost of a snowboard manufactured in 2012.
9.	Prepare an ending inventory budget for both direct materials and finished goods for 2012.
10.	Prepare a cost of goods sold budget for 2012.
11.	Prepare the budgeted income statement for Slatts, Inc., for the year ending December 31, 2012.
12	What questions might the CEO ask the management team when reviewing the budget? Should the CEO set stretch targets? Explain briefly