Problem 22-1A Manufacturing: Preparing production and The following information

Question

Problem 22-1A Manufacturing: Preparing production and The following information applies to the questions displayed below manufacturing budgets LO C2, P1 Black Diamond Company produces snow skis. Each ski requires 2 pounds of carbon fiber. The company's management predicts that 5.200 skis and 6.200 pounds of carbon fiber wil be in inventory on June 30 of the current year and that 152000 skis will be sold during the next (third) quarter. A set of two skis sells for $320. Management wants to end the third quarter with 3700 skis and 4,200 pounds of carbon fiber in Inventory. Carbon fiber can be purchased for $17 per pound. Each ski requires 0.4 hours of direct labor at S22 per hour. Variable overhead is applied at the rate of $10 per direct labor hour The company budgets fixed overhead of $1,784,000 for the quarter References Type here to search

Explanation / Answer

1) Preparing production budget for the third quarter :

2) Prepare direct materials budget for third quarter:

3) Direct labor budget for 3rd quarter

4) Manufacturing budget

Particulars Amount $ Budgeted Sales 152,000 Add: Desired ending inventory of finished goods 3,700 Total needed 155,700 Less: Beginning inventory of finished goods 5,200 Required production (A) 150,500

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