Case Study for Slopes Company. Comprehensive operating budget. Slopes, Inc., manufactures and sells snowboards. Slopes manufactures a single model, the Pipex. In the summer of 2018, Slope’s accountant gathered the following data to prepare budgets for 2019: Materials and labor requirements Direct materials: Wood 5 board feet per snowboard Fiberglass 6 yards per snowboard Direct manufacturing labor 5 hours per snowboard Slopes’ CEO expects to sell 1,000 snow boards during 2019 at an estimated retail price of RM 450 per board. Further, he expects 2019 beginning inventory of 100 boards, and would like to end 2019 with 200 snowboards in stock. Direct materials inventories Beginning Inventory Ending Inventory 1/1/2019 12/31/2019 ________________________________________________________ Wood 2,000 1,500 Fiberglass 1,000 2,000 Variable manufacturing overhead is allocated is allocated at the rate RM 7 per direct manufacturing labor-hour. There are also RM 66,000 in fixed manufacturing overhead costs budgeted for 2019.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 RM 250 per sales visit. The marketing plan calls for 30 sales visits during 2019. Finally, there are RM 30,000 in fixed nonmanufacturing costs budgeted for 2019. Other data includes: 2018 Unit Price 2019 Unit Price ____________________________________________________________ Wood RM 28 per b.f. RM 30 per b.f. Fiberglass RM 4.80 per yard RM 5 per yard Direct manufacturing labor RM 24 per hour RM 25 per hour The inventoriable unit cost for ending finished goods inventory on December 31, 2018 is RM 374.80. Assume Slopes uses a first-in first-out inventory method for both direct materials and finished goods. Ignore work in process in your calculation. Required Use the data and projections supplied by Slopes’ managers. Prepare the 2019 revenues budget (in RM). 1) Prepare the 2019 production budget (in unit) 2) Prepare the direct materials usage and purchases budgets.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Case Study for Slopes Company.
Comprehensive operating budget. Slopes, Inc., manufactures and sells snowboards. Slopes
manufactures a single model, the Pipex. In the summer of 2018, Slope’s accountant gathered
the following data to prepare budgets for 2019:
Materials and labor requirements
Direct materials:
Wood 5 board feet per snowboard
Fiberglass 6 yards per snowboard
Direct manufacturing labor 5 hours per snowboard
Slopes’ CEO expects to sell 1,000 snow boards during 2019 at an estimated retail price of
RM 450 per board. Further, he expects 2019 beginning inventory of 100 boards, and would like
to end 2019 with 200 snowboards in stock.
Direct materials inventories
Beginning Inventory Ending Inventory
1/1/2019 12/31/2019
________________________________________________________
Wood 2,000 1,500
Fiberglass 1,000 2,000
Variable manufacturing
manufacturing labor-hour. There are also RM 66,000 in fixed manufacturing overhead costs
budgeted for 2019.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 RM 250 per sales visit. The marketing plan calls for 30 sales visits during 2019.
Finally, there are RM 30,000 in fixed nonmanufacturing costs budgeted for 2019.
Other data includes:
2018 Unit Price 2019 Unit Price
____________________________________________________________
Wood RM 28 per b.f. RM 30 per b.f.
Fiberglass RM 4.80 per yard RM 5 per yard
Direct manufacturing labor RM 24 per hour RM 25 per hour
The inventoriable unit cost for ending finished goods inventory on December 31, 2018 is
RM 374.80. Assume Slopes uses a first-in first-out inventory method for both direct materials
and finished goods. Ignore work in process in your calculation.
Required
Use the data and projections supplied by Slopes’ managers. Prepare the 2019 revenues budget
(in RM).
1) Prepare the 2019 production budget (in unit)
2) Prepare the direct materials usage and purchases budgets.
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