) Prepare the 2019 production budget (in unit) 2) Prepare the direct materials usage and purchases budgets.

Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
10th Edition
ISBN:9781337902571
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter15: Working Capital Management
Section: Chapter Questions
Problem 10P: CASH BUDGETING Helen Bowers, owner of Helens Fashion Designs, is planning to request a line of...
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Case Study for REX Company.
Comprehensive operating budget. REX, Inc., manufactures and sells snowboards. REX
manufactures a single model, the Pipex. In the summer of 2018, REXS accountant gathered
the following data to prepare budgets for 2019:
Materials and labor requirements
Direct materials:
Wood 5 board feet per snowboard
Fiberglass 6 yards per snowboard
Direct manufacturing labor 5 hours per snowboard
REX’ CEO expects to sell 1,000 snow boards during 2019 at an estimated retail price of
$ 450 per board. Further, he expects 2019 beginning inventory of 100 boards, and would like
to end 2019 with 200 snowboards in stock.
Direct materials inventories

Beginning Inventory Ending Inventory
1/1/2019 12/31/2019
________________________________________________________
Wood 2,000 1,500
Fiberglass 1,000 2,000
Variable manufacturing overhead is allocated is allocated at the rate $ 7 per direct
manufacturing labor-hour. There are also $ 66,000 in fixed manufacturing overhead costs
budgeted for 2019.REX combines both variable and fixed manufacturing overhead into a
single rate based on direct manufacturing labor-hours. Variable marketing costs are allocated at
the rate of $ 250 per sales visit. The marketing plan calls for 30 sales visits during 2019.
Finally, there are $ 30,000 in fixed nonmanufacturing costs budgeted for 2019.
Other data includes:

2018 Unit Price 2019 Unit Price
____________________________________________________________
Wood $28 per b.f. $ 30 per b.f.
Fiberglass $ 4.80 per yard $ 5 per yard
Direct manufacturing labor $ 24 per hour $ 25 per hour
The inventoriable unit cost for ending finished goods inventory on December 31, 2018 is
$ 374.80. Assume REX uses a first-in first-out inventory method for both direct materials
and finished goods. Ignore work in process in your calculation.
Required
Use the data and projections supplied by REXs’ managers. Prepare the 2019 revenues budget
(in $).(must apply formula eNdning inventory  (+),(-) beginning inventory


1) Prepare the 2019 production budget (in unit)
2) Prepare the direct materials usage and purchases budgets.

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