BloomBoards, Inc. is a small manufacturing firm that produces and sells one mode
ID: 2376389 • Letter: B
Question
BloomBoards, Inc. is a small manufacturing firm that produces and sells one model of snowboard (the Pipex). In the fall of 2012, you (the management accountant) gathered the following data to prepare the 2013 annual budget:
Direct materials Wood = 5 boardfeet (bf) per snowboard
Fiberglass = 6 yards (yds) per snowboard
Direct Labor 5 hours per snowboard
It has been estimated that 1,000 units of Pipex will be sold during 2013, at a price of $450 per board. There will be 100 completed boards in inventory at 12/31/12 and it is budgeted that there will be 200 completed boards in inventory at 12/31/13. The direct materials inventories will include:
Inventory at 12/31/12 Inventory at 12/31/13
Wood 2,000 bf 1,500 bf
Fiberglass 1,000 yds 2,000 yds
Various budgeted costs for the manufacturing components includes:
2012 Cost 2013 Cost
Wood $28.00 per bf $30.00 per bf
Fiberglass $ 4.80 per yd $ 5.00 per yd
Direct Labor $24.00 per hour $25.00 per hour
Required
1. Prepare the following budgets for BloomBoards for 2013: 1. Sales; 2. Production; 3. Direct Materials (purchases and cost); 4. Direct Labor
Explanation / Answer
1) Saes revenue of snowboard:
Total Revenue= 1000*$450= $450000
2) Cost of Snowboard Sold:
2012: Cost - $28*5+$4.8*6+$24*5= $288.8/snowboard
2013: Cost - $30*5+$5*6+$25*5= $305/snowboard
Price of the 100 snowboards in inventory at the start of the accounting period = $288.8*100=$28880
Price of the rest 900 snowboards made and sold in the accounting period = $305*900=$274500
Cost of Goods Sold =$28880+$274500=$303380
3) Cost of raw material purchased:
$274500+$5*1000yrds of Fibreglass - $30*500bf of wood = $274500-$500= $274000
4) Cost of direct labor:
$25*5 = $125