Skulas, Inc., manufactures and sells snowboards. Skulas manu- factures a single model, the Pipex. In late 2017, Skulas's management accountant gathered the following data to prepare budgets for January 2018: Materials and Labor Requirements Direct materials Wood 9 board feet (b.f.) per snowboard Fiberglass Direct manufacturing labor 10 yards per snowboard 5 hours per snowboard Skulas's CEO expects to sell 2,900 snowboards during January 2018 at an estimated retail price of $650 per board. Further, the CEO expects 2018 beginning inventory of 500 snowboards and would like to end January 2018 with 200 snowboards in stock. Direct Materials Inventories Beginning Inventory 1/1/2018 Ending Inventory 1/31/2018 2,040 b.f. 1,040 yards 1,540 b.f. Wood Fiberglass 2,040 yards Variable manufacturing overhead is $7 per direct manufacturing labor-hour. There are also $81,000 in fixed manufacturing overhead costs budgeted for January 2018. Skulas combines both variable and fixed manu- facturing 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 38 sales visits during January 2018. Finally, there are $35,000 in fixed nonmanufacturing costs budgeted for January 2018. Other data include: 2017 2018 Unit Price Unit Price $32.00 per b.f. $ 8.00 per yard $34.00 per b.f. $ 9.00 per yard Wood Fiberglass Direct manufacturing labor $28.00 per hour $29.00 per hour The inventoriable unit cost for ending finished-goods inventory on December 31, 2017, is $374.80. Assume Skulas uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process in your calculations.
Skulas, Inc., manufactures and sells snowboards. Skulas manu- factures a single model, the Pipex. In late 2017, Skulas's management accountant gathered the following data to prepare budgets for January 2018: Materials and Labor Requirements Direct materials Wood 9 board feet (b.f.) per snowboard Fiberglass Direct manufacturing labor 10 yards per snowboard 5 hours per snowboard Skulas's CEO expects to sell 2,900 snowboards during January 2018 at an estimated retail price of $650 per board. Further, the CEO expects 2018 beginning inventory of 500 snowboards and would like to end January 2018 with 200 snowboards in stock. Direct Materials Inventories Beginning Inventory 1/1/2018 Ending Inventory 1/31/2018 2,040 b.f. 1,040 yards 1,540 b.f. Wood Fiberglass 2,040 yards Variable manufacturing overhead is $7 per direct manufacturing labor-hour. There are also $81,000 in fixed manufacturing overhead costs budgeted for January 2018. Skulas combines both variable and fixed manu- facturing 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 38 sales visits during January 2018. Finally, there are $35,000 in fixed nonmanufacturing costs budgeted for January 2018. Other data include: 2017 2018 Unit Price Unit Price $32.00 per b.f. $ 8.00 per yard $34.00 per b.f. $ 9.00 per yard Wood Fiberglass Direct manufacturing labor $28.00 per hour $29.00 per hour The inventoriable unit cost for ending finished-goods inventory on December 31, 2017, is $374.80. Assume Skulas uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process in your calculations.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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q.What questions might the CEO ask the management team when reviewing the budget? Should the CEO set stretch targets? Explain briefly.
Transcribed Image Text:Skulas, Inc., manufactures and sells snowboards. Skulas manu-
factures a single model, the Pipex. In late 2017, Skulas's management accountant gathered the following
data to prepare budgets for January 2018:
Materials and Labor Requirements
Direct materials
Wood
9 board feet (b.f.) per snowboard
Fiberglass
Direct manufacturing labor
10 yards per snowboard
5 hours per snowboard
Skulas's CEO expects to sell 2,900 snowboards during January 2018 at an estimated retail price of $650 per
board. Further, the CEO expects 2018 beginning inventory of 500 snowboards and would like to end January
2018 with 200 snowboards in stock.
Direct Materials Inventories
Beginning Inventory 1/1/2018
Ending Inventory 1/31/2018
2,040 b.f.
1,040 yards
1,540 b.f.
Wood
Fiberglass
2,040 yards
Variable manufacturing overhead is $7 per direct manufacturing labor-hour. There are also $81,000 in fixed
manufacturing overhead costs budgeted for January 2018. Skulas combines both variable and fixed manu-
facturing 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 38 sales visits during January
2018. Finally, there are $35,000 in fixed nonmanufacturing costs budgeted for January 2018.
Other data include:
2017
2018
Unit Price
Unit Price
$32.00 per b.f.
$ 8.00 per yard
$34.00 per b.f.
$ 9.00 per yard
Wood
Fiberglass
Direct manufacturing labor
$28.00 per hour
$29.00 per hour
The inventoriable unit cost for ending finished-goods inventory on December 31, 2017, is $374.80. Assume
Skulas uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process
in your calculations.
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