Question

Required information Problem 22-1A Manufacturing: Preparing production and manufacturing budgets LO P1 [The following information applies to the questions displayed below.] Black Diamond Company produces snow skis. Each ski requires 2 pounds of carbon fiber. The company’s management predicts that 5,000 skis and 6,000 pounds of carbon fiber will be in inventory on June 30 of the current year and that 150,000 skis will be sold during the next (third) quarter. A set of two skis sells for $300. Management wants to end the third quarter with 3,500 skis and 4,000 pounds of carbon fiber in inventory. Carbon fiber can be purchased for $15 per pound. Each ski requires 0.5 hours of direct labor at $20 per hour. Variable overhead is applied at the rate of $8 per direct labor hour. The company budgets fixed overhead of $1,782,000 for the quarter. Problem 22-1A Part 4 4. Prepare the factory overhead budget for the third quarter.

Problem 22-1A Part 4 4. Prepare the factory overhead budget for the third quarter. BLACK DIAMOND COMPANY Factory Overhead Budget Third Quarter Total labor hours needed

Answer 1

B11 A B Expected Sale Of Ski (Units) Add: Desired Ending Inventory Of Ski Total Needs Less: Beginning Inventory Of Ski Budgeted Production Of Ski (Units) Direct Labor Hour Per Unit Total Labor Hours Needed Third Quarter 150,000 3,500 153,500 -5,000 148,500 0.50 74,250 2 BLACK DIAMOND COMPANY Factory Overhead Budget Third Quarter Total Labor Hours Needed Variable Overhead Per Unit Total Variable Overhead Fixed Overhead Total Factory Overhead 74,250 $8 $ 594,000 $ 1,782,000 $ 2,376,000

for formulas and calculations, refer to the image below -

А в D E Nm 709 Expected Sale Of Ski (Units) Add: Desired Ending Inventory Of Ski Total Needs Less: Beginning Inventory Of Ski Budgeted Production Of Ski (Units) Direct Labor Hour Per Unit Total Labor Hours Needed Third Quarter 150000 3500 =D3+D4 -5000 =D5+D6 0.5 =D7*D8 BLACK DIAMOND COMPANY Factory Overhead Budget Third Quarter Total Labor Hours Needed =D9 Variable Overhead Per Unit Total Variable Overhead =D14*D15 Fixed Overhead 1782000 Total Factory Overhead =D16+D17

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