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?Skors, ?Inc., manufactures and sells snowboards. Skors,manufactures a single? model, the Pipex. In the summer of 2014, Skors management accountant gathered the following data to prepare budgets for 2015:

Materials and Labor Requirements

Direct materials

Wood 12 board feet (b.f.) per snowboard

Fiberglass 10 yards per snowboard

Direct manufacturing labor 6 hours per snowboard

Skors CEO expects to sell 3,100 snowboards during 2015 at an estimated retail price of $850 per board.? Further, the CEO expects 2015 beginning inventory of 600 snowboards and would like to end 2015 with 700 snowboards in stock.

Direct Materials Inventories
	Beginning Inventory 1/1/2015		Ending Inventory 12/31/2015
Wood	2,050	b.f.	1,550	b.f.
Fiberglass	1,050	yards	2,050	yards

Variable manufacturing overhead is $15 per direct manufacturing labor-hour. There are also $19,200 in fixed manufacturing overhead costs budgeted for 2015. Skors 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 $300 per sales visit. The marketing plan calls for 39 sales visits during 2015. Finally there are $36,000 in fixed nonmanufacturing costs budgeted for 2015.

2014 Unit Price 2015 Unit Price

Wood $33.00 per b.f. $35.00 per b.f.

Fiberglass $9.00 per yard $10.00 per yard

Direct manufacturing labor $29.00 per hour $30.00 per hour

Budgeted balances at December 31, 2015, in the selected accounts are as follows:

Cash

$15,000

Property, plant, and equipment (net)

855,000

Current liabilities

22,000

Long-term liabilities

183,000

Stockholders' equity

1,296,950

1.	Prepare the 20152015 revenues budget? (in dollars).
?2,	Prepare the 20152015 production budget? (in units).
3.	Prepare the direct material usage and purchases budgets for 20152015.
4.	Prepare a direct manufacturing labor budget for 20152015.
5.	Prepare a manufacturing overhead budget for 20152015.
6.	What is the budgeted manufacturing overhead rate for 20152015??
7.	What is the budgeted manufacturing overhead cost per output unit in 20152015??
8.	Calculate the cost of a snowboard manufactured in 20152015.
9.	Prepare an ending inventory budget for both direct materials and finished goods for 20152015.
10.	Prepare a cost of goods sold budget for 20152015.
11.	Prepare the budgeted income statement for SkorsSkors?, ?Inc., for the year ending December? 31, 20152015.
12.	Prepare the budgeted balance sheet for SkorsSkors?, ?Inc., as of December? 31, 20152015.
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 SkorsSkors?' management team better manage the? company?

Requirement 1. Prepare the 2015 revenues budget? (in dollars).

Revenue Budget
For the Year Ended December 31, 2015
	Units	Selling price	Total revenues
Snowboards

Requirement 2. Prepare the 2015 production budget? (in units).

Production Budget
For the Year Ended December 31, 2015
Budgeted units sales		3,100
Add target ending finished goods inventory		700
Total required units
Deduct beginning finished goods inventory		600
Units of finished goods to be produced

Requirement 3. Prepare the direct material usage and purchases budgets for 2015. Begin with the physical units? portion, then prepare the cost budget portion of the direct material usage budget.

Direct Material Usage Budget in Quantity and Dollars
For the Year Ended December 31, 2015
	Material
	Wood		Fiberglass		Total
Physical Units Budget
Direct materials required for
Snowboards		f.b.		yds

Cost Budget
Available from beginning direct materials inventory
(under a FIFO cost-flow assumption)
Wood
Fiberglass
To be purchased this period
Wood
Fiberglass
Direct materials to be used this period

Now prepare

2015

direct material purchases budget

Direct Materials Purchases Budget
For the Year Ended December 31, 2015
		Materials
		Wood		Fiberglass		Total
Physical Units Budget
To be used in production			b.f.		yards
Add target ending inventory		1,550	b.f.	2,050	yards
Total requirement			b.f.		yards
Deduct beginning inventory		2,050	b.f.	1,050	yards
Purchases to be made			b.f.		yards
Cost Budget
Purchases

Requirement 4. Prepare a direct manufacturing labor budget for

20152015.

?(Abbreviation used: DMLH? = Direct manufacturing labor? hours)

Direct Manufacturing Labor Costs Budget
For the Year Ended December 31, 2015
	Output Units		DMLH		Total		Hourly
	Produced		per Unit		Hours		Wage Rate		Total
Snowboards			6

Requirement 5. Prepare a manufacturing overhead budget for 2015. Begin the manufacturing overhead cost budgets by first determining the? formula, then calculate the variable manufacturing overhead costs. ?(Abbreviation used: Manuf.? = Manufacturing)

	x		=	Variable manufacturing overhead costs
	x		=

Now prepare the manufacturing overhead cost budgets.

Manufacturing Overhead Budget
For the Year Ended December 31, 2015
Variable manufacturing overhead costs
Fixed manufacturing overhead costs
Total

Requirement 6. What is the budgeted manufacturing overhead rate for

20152015??

Begin by determining the? formula, then enter the appropriate amounts to calculate the budgeted manufacturing overhead rate for

20152015.

?(Abbreviation used: Manuf.? = Manufacturing. Round the overhead rate to the nearest? cent.)

	/		=	Budgeted manufacturing overhead rate
	/		=

Requirement 7. What is the budgeted manufacturing overhead cost per output unit in 2015?? Begin by determining the? formula, then enter the appropriate amounts to calculate the budgeted manufacturing overhead cost per output unit in 2015.

?(Abbreviation used: Manuf.? = Manufacturing)

				Budgeted manuf. overhead
	/		=	cost per output unit
	/		=

Requirement 8. Calculate the cost of a snowboard manufactured in 2015.

Unit Costs of Manufacturing Finished Goods
December 31, 2015
	Cost per	Input per
	unit	unit
	of input	of output		Total
Direct materials
Wood		12	f.b.
Fiberglass		10	yds.
Direct manufacturing labor		6	hrs.
Budgeted manufacturing overhead cost
Total

Requirement 9. Prepare an ending inventory budget for both direct materials and finished goods for 2015.

Ending Inventories Budget
December 31, 2015
	Quantity		Cost per unit		Total
Direct materials
Wood	1,550
Fiberglass	2,050
Finished goods
Snowboard	700
Total ending inventory

Requirement 10. Prepare a cost of goods sold budget for 2015.

Cost of Goods Sold Budget
For the Year Ended December 31, 2015
Beginning finished goods inventory, January 1
Direct materials used
Direct manufacturing labor
Manufacturing overhead
Cost of goods manufactured
Cost of goods available for sale
Deduct ending finished goods inventory, December 31
Cost of goods sold

Requirement 11. Prepare the budgeted income statement for

SkorsSkors?,

?Inc., for the year ending December? 31, 2015.

Budgeted Income Statement
For the Year Ended December 31, 2015
Revenues
Cost of goods sold
Gross margin
Operating (nonmanufacturing) costs
Operating income

Requirement 12. Prepare the budgeted balance sheet for Skors?, ?Inc., as of December? 31, 2015.

Budgeted Balance Sheet
December 31, 2015
Cash	$15,000
Inventory
Property, plant and equipment (net)	855,000
Total assets
Current liabilities	$22,000
Long-term liabilities	183,000
Stockholders equity	1,296,950
Total liabilities and stockholders equity

Requirement 13. What questions might the CEO ask the management team when reviewing the? budget? Should the CEO set stretch? targets? Explain briefly.

?First, select the questions that the CEO might ask the marketing manager.? (Select all that? apply.)

?Now, select the questions that the CEO might ask the production manager.? (Select all that? apply.)

Should the CEO set stretch? targets? Explain briefly.

The CEO

?

should not set stretch targets

should set stretch targets that are challenging but achievable

?because: ? (Select all that? apply.)

Requirement 14. How does preparing the budget help

SkorsSkors?'

management team better manage the? company?

Preparing a budget helps

SkorsSkors?,

?Inc.: ?(Select all that? apply.)

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