Question

# Answer questions 4-10 using the information below: Fullerton, Inc. makes and sells a single snowboard model,...

Answer questions 4-10 using the information below:

Fullerton, Inc. makes and sells a single snowboard model, the Titan. Fullerton’s CEO expects to sell 3,910 snowboards at an estimated retail price of \$1,320 per board during 2018. In the fall of 2017, Fullerton gathered the following data to prepare budgets for 2018:

 Materials and Labor Requirements Wood 17 board feet (b.f.) per snowboard Fiberglass 15 yards per snowboard Direct labor 7 hours per snowboard

CEO expects to sell 3,910 snowboards during 2018 at an estimated retail price of

\$ 1,320 per board.​ Further, the CEO expects 2018 beginning inventory of 700 snowboards and would like to end 2018 with 900 snowboards in stock. The inventoriable unit cost for beginning finished goods inventory on January 1, 2018 ​is ​\$230.00.

Data pertaining to the direct materials inventories are as follows:

 Beginning Inventory Ending Inventory Wood 2,100 b.f. 1,600 b.f. Fiberglass 1,100 yards 2,100 yards

Variable manufacturing overhead is \$20 per direct labor-hour. There are also \$28,770 in fixed manufacturing overhead cots budgeted for 2018. Both variable and fixed overhead costs are allocated based on direct manufacturing labor-hours.

Other data include the following:

 2017 Unit Price 2018 Unit Price Wood \$38.00 per b.f. \$40.00 per b.f. Fiberglass \$14 per yard \$15 per yard Direct labor \$34.00 per hour \$35.00 per hour

Assume Fullerton uses a FIFO inventory method for both direct materials and finished goods. Ignore work in process in your calculations.

What is total cost of direct materials to be used?

\$3,352,250

\$4,135,300

\$4,217,500

\$3,714,250

Solution :

Working :

Cost of Direct Material Used :

 Wood Fiberglass Total Units to be Produced (3,910 + 900 - 710) 4,110 4,110 Requirement per Unit 17 Board Feet 15 Yards Total Requirement in Production 69,870 Board Feet 61,650 Yard Opening Used 2,100 Board Feet 1,100 Yards from Purchases 67,770 Board Feet 60,550 Yards Cost of Material Used (2,100 * 38) + (67,770 * 40) = \$ 2,790,600 (1,100 * \$ 14) + (60,550 * \$ 15) = \$ 923,650

Total Cost of Material Used = \$ 2,790,600 + \$ 923,650 = \$ 3,714,250

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