Question

Sales, Production, Direct Materials Purchases, and Direct Labor Cost

The budget director of Royal British Furniture Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales and production for March is summarized as follows:

a. Estimated sales of William and Kate chairs for March by sales territory:

Eastern Domestic:
	William	7,500 units at $800 per unit
	Kate	6,000 units at $650 per unit
Western Domestic:
	William	6,000 units at $700 per unit
	Kate	6,750 units at $550 per unit
International:
	William	2,500 units at $600 per unit
	Kate	1,000 units at $350 per unit

b. Estimated inventories at March 1:

Direct materials:				Finished products:
Fabric		5,500	sq. yds.	William	1,500	units
Wood		13,700	lineal ft.	Kate	300	units
Filler		3,800	cu. ft.
Springs		3,500	units

c. Desired inventories at March 31:

Direct materials:				Finished products:
Fabric		9,000	sq. yds.	William	2,000	units
Wood		20,000	lineal ft.	Kate	900	units
Filler		5,000	cu. ft.
Springs		7,500	units

d. Direct materials used in production:

In manufacture of William:
Fabric		4.0	sq. yds. per unit of product
Wood		16	lineal ft. per unit of product
Filler		3.8	cu. ft. per unit of product
Springs		14	units per unit of product
In manufacture of Kate:
Fabric		2.5	sq. yds. per unit of product
Wood		12	lineal ft. per unit of product
Filler		3.2	cu. ft. per unit of product
Springs		10	units per unit of product

e. Anticipated purchase price for direct materials:

Fabric		$9.00	per sq. yd.		Filler		$1.50	per cu. ft.
Wood		5.00	per lineal ft.		Springs		2.00	per unit

f. Direct labor requirements:

William:
Framing Department		2.5 hrs. at $15 per hr.
Cutting Department		1.0 hr. at $12 per hr.
Upholstery Department		3.0 hrs. at $16 per hr.
Kate:
Framing Department		1.5 hrs. at $15 per hr.
Cutting Department		0.5 hr. at $12 per hr.
Upholstery Department		2.0 hrs. at $16 per hr.

Required:

1. Prepare a sales budget for March.

Royal British Furniture Company
Sales Budget
For the Month Ending March 31
Product and Area	Unit Sales Volume	Unit Selling Price	Total Sales
William:
Eastern Domestic	fill in the blank 0316bbf70060fa7_1	$fill in the blank 0316bbf70060fa7_2	$fill in the blank 0316bbf70060fa7_3
Western Domestic	fill in the blank 0316bbf70060fa7_4	fill in the blank 0316bbf70060fa7_5	fill in the blank 0316bbf70060fa7_6
International	fill in the blank 0316bbf70060fa7_7	fill in the blank 0316bbf70060fa7_8	fill in the blank 0316bbf70060fa7_9
Total	fill in the blank 0316bbf70060fa7_10		$fill in the blank 0316bbf70060fa7_11
Kate:
Eastern Domestic	fill in the blank 0316bbf70060fa7_12	$fill in the blank 0316bbf70060fa7_13	$fill in the blank 0316bbf70060fa7_14
Western Domestic	fill in the blank 0316bbf70060fa7_15	fill in the blank 0316bbf70060fa7_16	fill in the blank 0316bbf70060fa7_17
International	fill in the blank 0316bbf70060fa7_18	fill in the blank 0316bbf70060fa7_19	fill in the blank 0316bbf70060fa7_20
Total	fill in the blank 0316bbf70060fa7_21		$fill in the blank 0316bbf70060fa7_22
Total revenue from sales			$fill in the blank 0316bbf70060fa7_23

2. Prepare a production budget for March.

Royal British Furniture Company
Production Budget
For the Month Ending March 31
	William Units	Kate Units
Expected units to be sold	fill in the blank be0e86fddfac04b_1	fill in the blank be0e86fddfac04b_2
	fill in the blank be0e86fddfac04b_4	fill in the blank be0e86fddfac04b_5
Total	fill in the blank be0e86fddfac04b_6	fill in the blank be0e86fddfac04b_7
	fill in the blank be0e86fddfac04b_9	fill in the blank be0e86fddfac04b_10
Total units to be produced	fill in the blank be0e86fddfac04b_11	fill in the blank be0e86fddfac04b_12

3. Prepare a direct materials purchases budget for March.

Royal British Furniture Company
Direct Materials Purchases Budget
For the Month Ending March 31
	Fabric (sq. yds.)	Wood (lineal ft.)	Direct Materials Filler (cu. ft.)	Springs (units)	Total
Required units for production:
William	fill in the blank f10e8dfdafb4fff_1	fill in the blank f10e8dfdafb4fff_2	fill in the blank f10e8dfdafb4fff_3	fill in the blank f10e8dfdafb4fff_4
Kate	fill in the blank f10e8dfdafb4fff_5	fill in the blank f10e8dfdafb4fff_6	fill in the blank f10e8dfdafb4fff_7	fill in the blank f10e8dfdafb4fff_8
	fill in the blank f10e8dfdafb4fff_10	fill in the blank f10e8dfdafb4fff_11	fill in the blank f10e8dfdafb4fff_12	fill in the blank f10e8dfdafb4fff_13
Total	fill in the blank f10e8dfdafb4fff_14	fill in the blank f10e8dfdafb4fff_15	fill in the blank f10e8dfdafb4fff_16	fill in the blank f10e8dfdafb4fff_17
	fill in the blank f10e8dfdafb4fff_19	fill in the blank f10e8dfdafb4fff_20	fill in the blank f10e8dfdafb4fff_21	fill in the blank f10e8dfdafb4fff_22
Total units to be purchased	fill in the blank f10e8dfdafb4fff_23	fill in the blank f10e8dfdafb4fff_24	fill in the blank f10e8dfdafb4fff_25	fill in the blank f10e8dfdafb4fff_26
Unit price	$fill in the blank f10e8dfdafb4fff_27	$fill in the blank f10e8dfdafb4fff_28	$fill in the blank f10e8dfdafb4fff_29	$fill in the blank f10e8dfdafb4fff_30
Total direct materials to be purchased	$fill in the blank f10e8dfdafb4fff_31	$fill in the blank f10e8dfdafb4fff_32	$fill in the blank f10e8dfdafb4fff_33	$fill in the blank f10e8dfdafb4fff_34	$fill in the blank f10e8dfdafb4fff_35

4. Prepare a direct labor cost budget for March.

Royal British Furniture Company
Direct Labor Cost Budget
For the Month Ending March 31
	Framing Department	Cutting Department	Upholstery Department	Total
Hours required for production:
William	fill in the blank 7fbad2ff0002fab_1	fill in the blank 7fbad2ff0002fab_2	fill in the blank 7fbad2ff0002fab_3
Kate	fill in the blank 7fbad2ff0002fab_4	fill in the blank 7fbad2ff0002fab_5	fill in the blank 7fbad2ff0002fab_6
Total	fill in the blank 7fbad2ff0002fab_7	fill in the blank 7fbad2ff0002fab_8	fill in the blank 7fbad2ff0002fab_9
Hourly rate	$fill in the blank 7fbad2ff0002fab_10	$fill in the blank 7fbad2ff0002fab_11	$fill in the blank 7fbad2ff0002fab_12
Total direct labor cost	$fill in the blank 7fbad2ff0002fab_13	$fill in the blank 7fbad2ff0002fab_14	$fill in the blank 7fbad2ff0002fab_15	$fill in the blank 7fbad2ff0002fab_16

Answer 1

SOLUTION:

1. SALES BUDGET FOR MARCH:

Royal British Furniture Company

Sales Budget

For the Month Ending March 31

Product & Area	Unit Sales Volume	Unit Selling Price	Total Sales
William:
Eastern Domestic	7500	800	6,000,000
Western Domestic	6000	700	4,200,000
International	2500	600	1,500,000
Total	16000		11,700,000
Kate:
Eastern Domestic	6000	650	3,900,000
Western Domestic	6750	550	3,712,500
International	1000	350	350,000
Total	13750		7,962,500
Total Revenue from Sales			19,662,500

2. PRODUCTION BUDGET FOR MARCH:

Royal British Furniture Company

Production Budget

For the Month Ending March 31

Units

Particulars	William	Kate
Budgeted No. of Units for Sale	16000	13750
Add: Desired Ending Inventory	2000	900
	18000	14650
Less: Opening Inventory	1500	300
Budgeted Production in Units	16500	14350

3. DIRECT MATERIALS PURCHASES BUDGET FOR MARCH:

Royal British Furniture Company

Direct Materials Purchases Budget

For the Month Ending March 31

Direct Materials

Particulars	Fabric (sq. yds.)	Wood (lineal ft.)	Filler (cu. ft.)	Springs (units)	Total
Required units for production:
William (16500*as per d)	66000	264000	62700	231000
Kate (14350*as per d)	35875	172200	45920	143500
Desired Inventory, March 31	9000	20000	5000	7500
Total	110875	456200	113620	382000
Estimated inventory, March 1	(5500)	(13700)	(3800)	(3500)
Total Units to be Purchased	105375	442500	109820	378500
Unit Price	9	5	1.5	2
Total Direct Materials to be Purchased	948375	2212500	164730	757000	4,082,605

4. DIRECT LABOUR COST BUDGET FOR MARCH:

Royal British Furniture Company

Direct Labor Cost Budget

For the Month Ending March 31

Direct Labour

Particulars	Framing Department	Cutting Department	Upholstery Department	Total
Hours required for production:
William (16500*as per e)	41250	16500	49500
Kate (14350*as per e)	21525	7175	28700
Total	62775	23675	78200
Hourly Rate	15	12	16
Total Direct labour Cost	941625	284100	1251200	2,476,925