Slopes, Inc., manufactures and sells snowboards. Slopes manufactures a single model, the Pipex. In the summer of 2011, Slopes’ management accountant gathered the following data to prepare budgets for 2012:
Materials and Labor Requirements
Direct materials – Wood 5 board feet per snowboard
Direct materials – Fiberglass 6 yards per snowboard
Direct Manufacturing labor 5 hours per snowboard
Slopes’ CEO expects to sell 1,000 snowboards during 2012 at an estimated retail price of $450 per board. Further the CEO expects 2012 beginning inventory of 100 snowboards and would like to end 2012 with 200 snowboards in stock.
Direct Materials Inventories
Beginning Inventory 1/1/2012 Ending Inventory 12/31/2012
Wood 2,000 board ft 1,500 board ft.
Fiberglass 1,000 yds 2,000 yds.
Variable manufacturing overhead if $7 per direct manufacturing labor-hour. There are also $66,000 in fixed manufacturing overhead costs budgeted for 2012. Slopes 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 30 sales visits during 2012. Finally, there are $30,000 in fixed nonmanufacturing costs budgeted for 2012.
Other data include the following:
2011 Unit Price 2012 Unit Price
Wood $28.00 per b.f. $30.00 per b.f.
Fiberglass $4.80 per yard $5.00 per yard
Direct manufacturing labor $24.00 per hour $25.00 per hour
The inventoriable unit cost for ending finished goods inventory on December 31, 2011, is $374.80. Assume Slopes uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process in your calculations.
Prepare the 2012 revenues budget, production budget, direct materials usage and purchase budgets, and direct manufacturing labor budget.
