Chapter 6, Problem 6.37P

1.

To determine

Master Budget:

The master budget is the core budget that describes the full process of the budget. This budget shows all the operating and financial plans of the company for an accounting period and this budget includes all the budgeted financial statements.

Revenue Budget:

The revenue budget is the budget prepared to estimate the revenue, the expected number of units to be produced and the expected selling price for each product. The revenue budget is the first step for an operating budget and the basis for the production and cost of goods sold budget.

To prepare: The revenue budget.

2.

To determine

Production Budget:

The production budget refers to that budget which forecasts the production for the future accounting period. The budgeted production for any financial period is planned by combining the forecasted unit of sales and the finished goods inventory and deducting the beginning goods inventory.

To prepare: The production budget in units.

3.

To determine

Direct Materials Usage Budget:

The direct materials usage budget is the budget made to estimate the use of materials for production in the coming period. The direct materials usage budget is a part of the operating budget.

Direct Materials Purchases Budget:

The direct materials purchases budget is prepared to estimate the quantity of material to be purchased for production. The purchases to be made are calculated by adding the total budgeted production to the ending inventory and then deducting the beginning inventory.

To prepare: The direct materials usage budget and purchases budget for January 2015.

4.

To determine

Direct Manufacturing Labor Costs Budget:

The direct labor budget provides information about the total direct manufacturing labor hours and the cost of the total direct manufacturing labor hour.

To prepare: The direct manufacturing labor costs budget for January 2015.

5.

To determine

To prepare: The manufacturing overhead costs to budget for January 2015.

6.

To determine

The budgeted manufacturing overhead rate for January 2015.

7.

To determine

The budgeted manufacturing overhead cost per output unit in January 2015.

8.

To determine

The cost of a snowboard manufactured in January 2015.

9.

To determine

To prepare: The ending inventory budget for both direct materials and finished goods for January 2015.

10.

To determine

Cost of Goods Sold Budget:

The cost of goods sold budget is the budget prepared to estimate the direct materials, labor and overhead for the coming financial period. This budget is the part of the operating budget.

To prepare: The cost of goods sold budget.

11.

To determine

To prepare: The budgeted income statement.

12.

To determine

To prepare: The budgeted balance sheet.

13.

To determine

To explain: The questions the CEO can ask the management team while reviewing the budgets and whether the targets will be stretched.

14.

To determine

To explain: The way in which the preparation of budget helps a management team to better manage the company.