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.
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The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
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Q.Prepare a cost of goods sold budget for January 2018.
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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