Slopes Inc. manufactures and sells snowboards. Slopes manufactures a single model, the Pipex. In the summer of 2011, Slopes' management accountant gathered the following data to prepare budgets for 2012: Materials and Labor Requirements Direct materials Wood 5 board feet (b.) per snowboard Fiberglass 6 yards per snowboard Direct manufacturing labor 5 hours per snowboard Slopes CEO expects to sell 1,000 snowboards during 2012 at an estimated retail price of $450 per board. Further, the CEO expects 2012 beginning inventory of 100 snowboards and would like to end 2012 with 200 snowboards in stock. Direct Materials inventories Beginning Inventory 1/1/2012 Wood 2,000 5.1. Fiberglass 1,000 yards Ending Inventory 12/31/2012 1,500 b.. 2,000 yards Variable manufacturing overhead is $7 per direct manufacturing labor-hour. There are also $66,000 in fixed manufacturing overhead costs budgeted for 2012. Slopes combines both variable and fixed man ufacturing 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 2012. Finally, there are $30,000 in fixed nonmanufacturing costs budgeted for 2012. Other data include the following: 2011 Unit Price 2012 Unit Price Wood $28.00 per b.f. $30.00 per b.f. Fiberglass $ 480 per yard $ 5.00 per yard Direct manufacturing labor $24.00 per hour $25.00 per hour The inventoriable unit cost for ending finished goods inventory on December 31, 2011, 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, 2012, in the selected accounts are as follows: Cash $ 10,000 Property, plant, and equipment (net) 850,000 Current liabilities 17,000 Long-term liabilities 178,000 Stockholders' equity 800,000 - 1. Prepare the 2012 revenues budget (in dollars). 2. Prepare the 2012 production budget fin 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 20127 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 Slopes, Inc., for the year ending December 31, 2012 12. Prepare the budgeted balance sheet for Slopes, Inc., as of December 31, 2012 Part II Other considerations: 1) Since its inception, Slopes has used spruce wood for the core of its snowboards. Several years ago, due to environmental concerns, Slopes switched from use of spruce to bamboo. The special, high quality bamboo that Slopes now uses is only grown in a remote area of Guange Province, China. The bamboo is fast growing, however is sensitive to man-made contaminants including air pollution. In June of 2011, Slopes hired a new controller who desires to slash costs. The controller is particularly interested in instituting an aggressive JIT system that will result in ending inventories of all items (including wood and fiberglass) to be near zero. You are the assistant controller at Slopes and you possess knowledge of all phases of operations. How might you advise the new controller regarding his/her plans? 2) Suppose that the standard Direct Manufacturing Labor rate is 5 hours of labor per each board produced. This is a long-standing industry standard and has also been used successfully for many years in the past at Slopes. A new production manager is hired and he immediately complains that the standard should be increased to 9 hours of labor per each produced board. You are suspicious as to why the new production manager desires to change the standard. What might be the new production manager's motive? What discussed concept may be applicable to this situation? 3) The CEO of Slopes desires to increase profits and has stated that effective immediately all department heads will be only be evaluated on their actual performance compared their respective budgets. Department heads who do not meet their budget numbers will be terminated. Wanting to comply with the new policy, the foreman of the machining department decided to cut regularly scheduled safety inspections and was heard commenting, "I really can't be concerned about worker safety, anymore". The Q.C. area manager, concerned about meeting her labor budget, decided to lay off one worker and to make up for the lost resources, has decided to inspect every other snowboard produced rather than 100% of produced boards. The factory's chief environmental officer is now considering burning the bamboo shavings left over from the manufacturing process rather than recycling them. Do you agree with CEO's approach? What specific concept that was discussed in the course may be applicable to the consequences of this approach? Directions: Using Excel, prepare the required budgets listed in "Part 1". Prepare the report as if it will be submitted to the Controller of the company. Accordingly, your work should be accurate and presentable. Slopes Inc. manufactures and sells snowboards. Slopes manufactures a single model, the Pipex. In the summer of 2011, Slopes' management accountant gathered the following data to prepare budgets for 2012: Materials and Labor Requirements Direct materials Wood 5 board feet (b.) per snowboard Fiberglass 6 yards per snowboard Direct manufacturing labor 5 hours per snowboard Slopes CEO expects to sell 1,000 snowboards during 2012 at an estimated retail price of $450 per board. Further, the CEO expects 2012 beginning inventory of 100 snowboards and would like to end 2012 with 200 snowboards in stock. Direct Materials inventories Beginning Inventory 1/1/2012 Wood 2,000 5.1. Fiberglass 1,000 yards Ending Inventory 12/31/2012 1,500 b.. 2,000 yards Variable manufacturing overhead is $7 per direct manufacturing labor-hour. There are also $66,000 in fixed manufacturing overhead costs budgeted for 2012. Slopes combines both variable and fixed man ufacturing 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 2012. Finally, there are $30,000 in fixed nonmanufacturing costs budgeted for 2012. Other data include the following: 2011 Unit Price 2012 Unit Price Wood $28.00 per b.f. $30.00 per b.f. Fiberglass $ 480 per yard $ 5.00 per yard Direct manufacturing labor $24.00 per hour $25.00 per hour The inventoriable unit cost for ending finished goods inventory on December 31, 2011, 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, 2012, in the selected accounts are as follows: Cash $ 10,000 Property, plant, and equipment (net) 850,000 Current liabilities 17,000 Long-term liabilities 178,000 Stockholders' equity 800,000 - 1. Prepare the 2012 revenues budget (in dollars). 2. Prepare the 2012 production budget fin 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 20127 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 Slopes, Inc., for the year ending December 31, 2012 12. Prepare the budgeted balance sheet for Slopes, Inc., as of December 31, 2012 Part II Other considerations: 1) Since its inception, Slopes has used spruce wood for the core of its snowboards. Several years ago, due to environmental concerns, Slopes switched from use of spruce to bamboo. The special, high quality bamboo that Slopes now uses is only grown in a remote area of Guange Province, China. The bamboo is fast growing, however is sensitive to man-made contaminants including air pollution. In June of 2011, Slopes hired a new controller who desires to slash costs. The controller is particularly interested in instituting an aggressive JIT system that will result in ending inventories of all items (including wood and fiberglass) to be near zero. You are the assistant controller at Slopes and you possess knowledge of all phases of operations. How might you advise the new controller regarding his/her plans? 2) Suppose that the standard Direct Manufacturing Labor rate is 5 hours of labor per each board produced. This is a long-standing industry standard and has also been used successfully for many years in the past at Slopes. A new production manager is hired and he immediately complains that the standard should be increased to 9 hours of labor per each produced board. You are suspicious as to why the new production manager desires to change the standard. What might be the new production manager's motive? What discussed concept may be applicable to this situation? 3) The CEO of Slopes desires to increase profits and has stated that effective immediately all department heads will be only be evaluated on their actual performance compared their respective budgets. Department heads who do not meet their budget numbers will be terminated. Wanting to comply with the new policy, the foreman of the machining department decided to cut regularly scheduled safety inspections and was heard commenting, "I really can't be concerned about worker safety, anymore". The Q.C. area manager, concerned about meeting her labor budget, decided to lay off one worker and to make up for the lost resources, has decided to inspect every other snowboard produced rather than 100% of produced boards. The factory's chief environmental officer is now considering burning the bamboo shavings left over from the manufacturing process rather than recycling them. Do you agree with CEO's approach? What specific concept that was discussed in the course may be applicable to the consequences of this approach? Directions: Using Excel, prepare the required budgets listed in "Part 1". Prepare the report as if it will be submitted to the Controller of the company. Accordingly, your work should be accurate and presentable