Problem 22-6AA: Manufacturing: Preparing production and manufacturing budgets LO C2, P3 [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 22-6AA: Manufacturing: Preparing production and manufacturing budgets LO C2, P3

[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. Required: 1. Prepare the third-quarter production budget for skis. 2. Prepare the third-quarter direct materials (carbon fiber) budget; include the dollar cost of purchases. 3. Prepare the direct labor budget for the third quarter. (Round Labor requirements per unit answer to 2 decimal places.) 4. Prepare the factory overhead budget for the third quarter.