Black Diamond Company produces snow skis. Each ski requires 2 pounds of carbon f

Question

Black Diamond Company produces snow skis. Each ski requires 2 pounds of carbon fiber. The company’s management predicts that 6,400 skis and 7,400 pounds of carbon fiber will be in inventory on June 30 of the current year and that 164,000 skis will be sold during the next (third) quarter. A set of two skis sells for $440. Management wants to end the third quarter with 4,900 skis and 5,400 pounds of carbon fiber in inventory. Carbon fiber can be purchased for $13 per pound. Each ski requires 0.5 hours of direct labor at $18 per hour. Variable overhead is applied at the rate of $8 pedirect labor hour. The company budgets fixed overhead of $1,796,000 for the quarter.

Explanation / Answer

1)

2)

2273000

3)

4)

Production budget for 3rd quarter + Forecasted unit sales 164000 + Planned finished goods ending inventory balance 4900 Total production required - Beginning finished goods inventory -6400 Products to be manufactured 162500

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