Slopes, Inc., manufactures and sells snowboards. The company 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.f.) 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 Ending Inventory 12/31/2012
Wood 2,000 b.f. 1,500 b.f.
Fiberglass 1,000 yards 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 manufacturing overhead into a single rate based on direct manufacturing
labor-hours. Variable marketing costs are allocated at the rate of $250 per sales visit. Themarketing plan calls for 30 sales visits during 2012. Finally, there are $30,000 in fixed
nonmanufacturing costs budgeted for 2012.
Additional information:
2011 Unit Price 2012 Unit Price
Wood $28 .00 per b.f. $30.00 per b.f.
Fiberglass $ 4.80 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.
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

marketing plan calls for 30 sales visits during 2012. Finally, there are $30,000 in fixed
nonmanufacturing costs budgeted for 2012.
Additional information:
2011 Unit Price 2012 Unit Price
Wood $28 .00 per b.f. $30.00 per b.f.
Fiberglass $ 4.80 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.
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
Required:
Prepare the (a) :
1. 2012 revenues budget (in dollars).
2. 2012 production budget (in units).
3. Direct material usage and purchases budgets for 2012.
4. Direct manufacturing labor budget for 2012.
5. 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 Slopes, Inc., for the year ending December 31,
2012.
12. Prepare the budgeted balance sheet for Slopes, Inc., as of December 31, 2012