Question

Skulas, Inc., manufactures and sells snowboards. Skulas manufactures a single model, the Pipex. In the summer of 2014, Skulas’ management accountant gathered the following data to prepare budgets for 2015:
Materials and Labor Requirements
Direct materials
Wood ................. 9 board feet (b.f.) per snowboard
Fiberglass ................. 10 yards per snowboard
Direct manufacturing labor ......... 5 hours per snowboard
Skulas’ CEO expects to sell 2,900 snowboards during 2015 at an estimated retail price of $ 650 per board. Further, the CEO expects 2015 beginning inventory of 500 snowboards and would like to end 2015 with 200 snowboards in stock.


Variable manufacturing overhead is $ 7 per direct manufacturing labor-hour. There are also $ 81,000 in fixed manufacturing overhead costs budgeted for 2015. Skulas 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. The marketing plan calls for 38 sales visits during 2015. Finally, there are $ 35,000 in fixed nonmanufacturing costs budgeted for 2015. Other data include:


The inventoriable unit cost for ending finished goods inventory on December 31, 2014, is $ 374.80. Assume Skulas uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process in your calculations. Budgeted balances at December 31, 2014, in the selected accounts are as follows:
Cash ................... $ 14,000
Property, plant, and equipment (net) ........ 854,000
Current liabilities .............. 21,000
Long-term liabilities .............. 182,000
Stockholders’ equity .............. 857,120


Required
1. Prepare the 2015 revenues budget (in dollars).
2. Prepare the 2015 production budget (in units).
3. Prepare the direct material usage and purchases budgets for 2015.
4. Prepare a direct manufacturing labor budget for 2015.
5. Prepare a manufacturing overhead budget for 2015.
6. What is the budgeted manufacturing overhead rate for 2015?
7. What is the budgeted manufacturing overhead cost per output unit in 2015?
8. Calculate the cost of a snowboard manufactured in 2015.
9. Prepare an ending inventory budget for both direct materials and finished goods for 2015.
10. Prepare a cost of goods sold budget for 2015.
11. Prepare the budgeted income statement for Skulas, Inc., for the year ending December 31, 2015.
12. Prepare the budgeted balance sheet for Skulas, Inc., as of December 31, 2015.
13. What questions might the CEO ask the management team when reviewing the budget? Should the CEO set stretch targets? Explain briefly.
14. How does preparing the budget help Skulas’ management team better manage thecompany?


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  • CreatedMay 14, 2014
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