Skulas, Inc., manufactures and sells snowboards. Skulas manufactures a single model, the Pipex. In late 2020, Skulas’s management accountant gathered the following data to prepare budgets for January 2021:

Skulas’s CEO expects to sell 2,900 snowboards during January 2021 at an estimated retail price of $650 per board. Further, the CEO expects a 2021 beginning inventory of 500 snowboards and would like to end January 2021 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 January 2021. 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 January 2021. Finally, there are $35,000 in fixed operating (nonmanufacturing) costs budgeted for January 2021.
Other data include the following:

The inventoriable unit cost for ending finished-goods inventory on December 31, 2020, is $374.80. Assume Skulas uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process in your calculations.

Required

1. Prepare the January 2021 revenues budget (in dollars).
2. Prepare the January 2021 production budget (in units).
3. Prepare the direct material usage and purchases budgets for January 2021.
4. Prepare a direct manufacturing labor costs budget for January 2021.
5. Prepare a manufacturing overhead costs budget for January 2021.
6. What is the budgeted manufacturing overhead rate for January 2021?
7. What is the budgeted manufacturing overhead cost per output unit in January 2021?
8. Calculate the cost of a snowboard manufactured in January 2021.
9. Prepare an ending inventory budget for both direct materials and finished goods for January 2021.
10. Prepare a cost of goods sold budget for January 2021.
11. Prepare the budgeted operating income statement for Skulas, Inc., for January 2021.
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 Skulas’s management team better manage the company?

Transcribed Image Text:

Direct materials Wood Materials and Labor Requirements Fiberglass Direct manufacturing labor 9 board feet (b.f.) per snowboard 10 yards per snowboard 5 hours per snowboard