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# Black diamond Slope Co: Prepare production and direct materi

Preparing production and direct materials budgets

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Problem 7-6AA Preparing production and direct materials budgets L.O. C3, P3
Black Diamond Slope 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. 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.

Requirement 1:
Prepare the third-quarter production budget for skis. (Amounts in parentheses does not require a minus
sign.)
BLACK DIAMOND SLOPE COMPANY
Production Budget (in units)
Third Quarter
Budgeted ending inventory (skis)
Required units of available production
( )
Units to be manufactured

Requirement 2:
Prepare the third-quarter direct materials (carbon fiber) budget; include the dollar cost of purchases. (Omit the
BLACK DIAMOND SLOPE COMPANY
Direct Materials Budget (in lbs, except where noted)
Third Quarter
Materials (carbon fiber) needed for production
Total materials (carbon fiber) requirements
( )
Units of materials (carbon fiber) to be purchased
Materials cost per pound \$
Total cost of materials purchases \$

#### Solution Preview

Problem 7-6AA Preparing production and direct materials budgets L.O. C3, P3
Black Diamond Slope 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. Management wants to end the third ...

#### Solution Summary

This solution is comprised of a detailed explanation to prepare production and direct materials budgets.

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