Question

Sleds, Inc., manufactures and sells snow-boards. Sleds manufactures a single model, the Pipex. In the summer of 2012, Sleds’ management accountant gathered the following data to prepare budgets for 2013:
Materials and Labor Requirements
Direct materials
Wood............ 7 board feet (b. f.) per snowboard
Fiberglass ........... 6 yards per snowboard
Direct manufacturing labor.... 6 hours per snowboard

Sleds’ management expects to sell 1,275 snowboards during 2013 at an estimated retail price of $ 550 per board. Furthermore, the CEO expects 2013 beginning inventory of 500 snowboards and would like to end 2013 with 700 snowboards in stock.


Variable manufacturing overhead is $ 10 per direct manufacturing labor- hour. There are also $ 70,800 in fixed manufacturing overhead costs budgeted for 2013. Sleds combines both variable and fixed manufacturing over-head into a single rate based on direct manufacturing labor- hours. Variable marketing costs are allocated at the rate of $ 260 per sales visit. The marketing plan calls for 35 sales visits during 2013. Finally, there are $ 32,400 in fixed nonmanufacturing costs budgeted for 2013.
Other data include:


The inventoriable unit cost for ending finished goods inventory on December 31, 2012, is $ 440.00. Assume Sleds uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process in your calculations.


Required
1. Prepare the 2013 revenues budget (in dollars).
2. Prepare the 2013 production budget (in units).
3. Prepare the direct material usage and purchases budgets for 2013.
4. Prepare a direct manufacturing labor budget for 2013.
5. Prepare a manufacturing overhead budget for 2013.
6. What is the budgeted manufacturing overhead rate for 2013?
7. What is the budgeted manufacturing overhead cost per output unit in 2013?
8. Calculate the cost of a snowboard manufactured in 2013.
9. Prepare an ending inventory budget for both direct materials and finished goods for 2013.
10. Prepare a cost of goods sold budget for 2013.
11. Prepare the budgeted income statement for Sleds, Inc., for the year ending December 31, 2013.
12. What questions might the CEO ask the management team when reviewing the budget? Should the CEO set stretch targets? Explain briefly.
13. How does preparing the budget help Sleds’ management team better manage thecompany?


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  • CreatedJanuary 15, 2015
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