Required information Problem 22-1A Manufacturing: Preparing production and manuf

Question

Required information Problem 22-1A Manufacturing: Preparing production and manufacturing budgets LO C2, P1 IThe following information applies to the questions displayed belowJ Black Diamond Company produces snow skis. Each ski requires 2 pounds of carbon fiber. The company's management predicts that 5,600 skis and 6,600 pounds of carbon fiber will be in inventory on June 30 of the current year and that 156,000 skis will be sold during the next (third) quarter. A set of two skis sells for $360. Management wants to end the third quarter with 4,100 skis and 4,600 pounds of carbon fiber in inventory. Carbon fiber can be purchased for $21 per pound. Each ski requires 0.5 hours of direct labor at $26 per hour. Varlable overhead is applied at the rate of $14 per direct labor hour. The company budgets fixed overhead of $1,788,000 for the quarter. Problem 22-1A Part 3 3. Prepare the direct labor budget for the third quarter. BLACK DIAMOND COMPANY Direct Labor Budget Third Quarter Units to be produced Total labor hours needed Budgeted direct labor cost

Explanation / Answer

Direct labour budget :

Sales in third quarter 156000 Add; Desired ending inventory 4100 Total needs 160100 Less; Beginning inventory (5600) Production units 154500 Labour hour per unit 0.50 Production hour 77250 Rate per hour 26 Budgeted direct labour cost 2008500

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