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Sales, Production, Direct Materials Purchases, and Direct Labor Cost Budgets The budget director of Royal Furniture...

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

The budget director of Royal 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 February is summarized as follows:

a. Estimated sales of King and Prince chairs for February by sales territory:

Northern Domestic:
    King 610 units at $780 per unit
    Prince 750 units at $550 per unit
Southern Domestic:
    King 340 units at $780 per unit
    Prince 440 units at $550 per unit
International:
    King 360 units at $850 per unit
    Prince 290 units at $600 per unit

b. Estimated inventories at February 1:

Direct materials:
    Fabric 420 sq. yds.
    Wood 580 linear ft.
    Filler 250 cu. ft.
    Springs 660 units
Finished products:
    King 90 units
    Prince 25 units

c. Desired inventories at February 28:

Direct materials:
    Fabric 390 sq. yds.
    Wood 650 linear ft.
    Filler 300 cu. ft.
    Springs 540 units
Finished products:
    King 80 units
    Prince 35 units

d. Direct materials used in production:

In manufacture of King:
    Fabric 6.0 sq. yds. per unit of product
    Wood 38 linear ft. per unit of product
    Filler 4.2 cu. ft. per unit of product
    Springs 16 units per unit of product
In manufacture of Prince:
    Fabric 4.0 sq. yds. per unit of product
    Wood 26 linear ft. per unit of product
    Filler 3.4 cu. ft. per unit of product
    Springs 12 units per unit of product

e. Anticipated purchase price for direct materials:

Fabric $12.00 per sq. yd.
Wood 7.00 per linear ft.
Filler $3.00 per cu. ft.
Springs 4.50 per unit

f. Direct labor requirements:

King:
    Framing Department 1.2 hrs. at $12 per hr.
    Cutting Department 0.5 hr. at $14 per hr.
    Upholstery Department 0.8 hr. at $15 per hr.
Prince:
    Framing Department 1.0 hr. at $12 per hr.
    Cutting Department 0.4 hr. at $14 per hr.
    Upholstery Department 0.6 hr. at $15 per hr.

Required:

1. Prepare a sales budget for February.

Royal Furniture Company
Sales Budget
For the Month Ending February 28
Product and Area Unit Sales
Volume
Unit Selling
Price
Total Sales
King:
Northern Domestic $ $
Southern Domestic
International
Total $
Prince:
Northern Domestic $ $
Southern Domestic
International
Total $
Total revenue from sales $

2. Prepare a production budget for February. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Royal Furniture Company
Production Budget
For the Month Ending February 28
Units
King Prince

3. Prepare a direct materials purchases budget for February. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Royal Furniture Company
Direct Materials Purchases Budget
For the Month Ending February 28
Direct Materials
Fabric
(sq. yds.)
Wood
(linear ft.)
Filler
(cu. ft.)
Springs
(units)
Total
Required units for production:
King
Prince
Desired inventory, February 28
Total
Estimated inventory, February 1
Total units to be purchased
Unit price $ $ $ $
Total direct materials to be purchased $ $ $ $ $

4. Prepare a direct labor cost budget for February.

Royal Furniture Company
Direct Labor Cost Budget
For the Month Ending February 28
Framing
Department
Cutting
Department
Upholstery
Department
Total
Hours required for production:
King
Prince
Total
Hourly rate $ $ $
Total direct labor cost $ $ $ $

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