Slatts, Inc., manufactures and sells snowboards. Slatts manufactures a single model, the Pipex. In the summer of 2011, Slatts' management accountant gathered the following data to prepare budgets for 2012: Materials and Labor Requirements Direct materials: Wood 13 board feet (b.f.) per snowboard Fiberglass 11 yards per snowboard Direct manufacturing labor 7 hours per snowboard Slatts' management expects to sell 3,400 snowboards during 2012 at an estimated retail price of $1,000 per board. Furthermore, the CEO expects 2012 beginning inventory of 700 snowboards and would like to end 2012 with 800 snowboards in stock. Direct Materials Inventories Beginning Inventory 1/1/2012 Ending Inventory 12/31/2012 Wood 2,060 b.f. 1,560 b.f. Fiberglass 1,060 yards 2,060 yards Variable manufacturing overhead is $16 per direct manufacturing labor-hour. There are also $98,000 in fixed manufacturing overhead costs budgeted for 2012. Slatts 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 $310 per sales visit. The marketing plan calls for 40 sales visits during 2012. Finally, there are $37,000 in fixed nonmanufacturing costs budgeted for 2012. 2011 Unit Price 2012 Unit Price Wood $34.00per b.f. $36.00per b.f. Fiberglass $10.00per yard $11.00per yard Direct manufacturing labor $30.00per hour $31.00per hour The inventoriable unit cost for ending finished goods inventory on December 31, 2011, is $200.00. Assume Slatts uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process in your calculations. REQUIRED 1. Prepare the 2012 revenues budget (in dollars). 2. Prepare the 2012 production budget (in units). 3. Prepare the direct material usage and purchases budgets for 2012.
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.
Slatts, Inc., manufactures and sells snowboards. Slatts manufactures a single model, the Pipex. In the summer of 2011, Slatts'
Materials and Labor Requirements
Direct materials:
Wood 13 board feet (b.f.) per snowboard
Fiberglass 11 yards per snowboard
Direct manufacturing labor 7 hours per snowboard
Slatts' management expects to sell 3,400 snowboards during 2012 at an estimated retail price of $1,000
per board. Furthermore, the CEO expects 2012 beginning inventory of 700 snowboards and would like to end 2012 with 800 snowboards in stock.
|
Direct Materials Inventories |
||||
|
|
Beginning Inventory 1/1/2012 |
Ending Inventory 12/31/2012 |
||
|
Wood |
2,060 |
b.f. |
1,560 |
b.f. |
|
Fiberglass |
1,060 |
yards |
2,060 |
yards |
Variable manufacturing overhead is $16 per direct manufacturing labor-hour. There are also $98,000 in fixed manufacturing overhead costs budgeted for 2012. Slatts 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 $310 per sales visit. The marketing plan calls for 40 sales visits during 2012. Finally, there are $37,000 in fixed nonmanufacturing costs budgeted for 2012.
2011 Unit Price 2012 Unit Price
Wood $34.00per b.f. $36.00per b.f.
Fiberglass $10.00per yard $11.00per yard
Direct manufacturing labor $30.00per hour $31.00per hour
The inventoriable unit cost for ending finished goods inventory on December 31, 2011, is $200.00.
Assume Slatts uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process in your calculations.
REQUIRED
|
1. |
Prepare the 2012 revenues budget (in dollars). |
|
2. |
Prepare the 2012 production budget (in units). |
|
3. |
Prepare the direct material usage and purchases budgets for 2012. |
|
4. |
Prepare a direct manufacturing labor budget for 2012. |
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5. |
Prepare a manufacturing overhead budget for 2012. |
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6. |
What is the budgeted manufacturing overhead rate for 2012? |
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7. |
What is the budgeted |
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8. |
Calculate the cost of a snowboard manufactured in 2012. |
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9. |
Prepare an ending inventory budget for both direct materials and finished goods for 2012. |
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10. |
Prepare a cost of goods sold budget for 2012. |
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11. |
Prepare the |
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12 |
What questions might the CEO ask the management team when reviewing the budget? Should the CEO set stretch targets? Explain briefly |
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13. |
How does preparing the budget help Slatts' management team better manage the company? |
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