Question

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 purchased?

Group of answer choices

$4,218,100

$3,714,550

$3,352,550

$4,135,600

Answer 1

Answer: $3,714,550

Explanation:

Budgeted selling units	3910
Desired ending units	900
Total units required	4810
Less: Opening units	700
Units to be Produced	4110

Particulars	Wood	Fiberglass
Units to be Produced	4110	4110
Material req per unit	17	15
material req for production	69870	61650
Add: Ending inventory	1600	2100
Total materials required	71470	63750
Less: Opening inventory	2100	1100
Purchase of materials	69370	62650
Cost per material	$40	$15
Total cost	$2,774,800	$939,750

Total cost = $2,774,800 + $939,750 = $3,714,550