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3 years ago

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Black Diamond Company produces snowboards. Each snowboard requires 2 pounds of carbon fiber. Management reports that 5,000 snowb

oards and 6,000 pounds of carbon fiber are in inventory at the beginning of the third quarter, and that 150,000 snowboards are budgeted to be sold during the third quarter. Management wants to end the third quarter with 3,500 snowboards and 4,000 pounds of carbon fiber in inventory. Carbon fiber costs $15 per pound. Each snowboard requires 0.5 hour of direct labor at $20 per hour. Variable overhead is budgeted at the rate of $8 per direct labor hour. The company budgets fixed overhead of $1,782,000 for the quarter. Required: 1. Prepare the production budget for the third quarter. Hint: Desired ending inventory units are given.

1 answer:

Nonamiya [84]3 years ago

8 0

1.Based on the information given the production budget for the third quarter is 148,500.

2. Budgeted cost of direct material purchases is 4,425,000.

3. Budgeted Direct labor cost is $1,485,000.

4. Total factory overhead is $2,376,000.

1. Budgeted production

BLACK DIAMOND COMPANY

Production Budget (in units) Third Quarter

Budgeted units sales 150,000

Add: Budgeted ending inventory 3,500

Less: Budgeted beginning inventory (5,000)

Budgeted production 148,500

2. Direct material budget

BLACK DIAMOND COMPANY

Direct Materials Budget Third Quarter

Budgeted production 148,500 units

Materials requirement per unit 2

Materials needed for production 297,000

(148,500units×2)

Budgeted ending inventory 4,000

Total material requirements(lbs.) 301,000

(297,000+4,000)

Budgeted beginning inventory 6000

Direct Materials to be purchased (lbs.) 295,000

(301,000-6,000)

Materials price per pound 15.00per

Budgeted cost of direct material purchases 4,425,000

(295,000×15 per)

3. Direct labor budget

BLACK DIAMOND COMPANY

Direct labor Budget Third Quarter

Budgeted Production 148,500

Budgeted Direct labor hours 74,250

(148,500×0.5)

Budgeted Direct labor cost $1,485,000

(74,250×$20)

4. Factory overhead budget

BLACK DIAMOND COMPANY

Factory Overhead Budget Third Quarter

Variable overhead $594,000

(74,250×$8)

Add Fixed overhead $1,782,000

Total factory overhead $2,376,000

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Explanation:

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Now,

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On substituting the values, we get

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hence,

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I hope my answer helps you.

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