Question

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

The budget director of Gourmet Grill 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 for March by sales territory:

Maine:
Backyard Chef	350 units at $800 per unit
Master Chef	200 units at $1,400 per unit
Vermont:
Backyard Chef	400 units at $825 per unit
Master Chef	240 units at $1,500 per unit
New Hampshire:
Backyard Chef	320 units at $850 per unit
Master Chef	200 units at $1,600 per unit

b. Estimated inventories at March 1:

Direct materials:
Grates	320 units
Stainless steel	1,700 lb.
Burner subassemblies	190 units
Shelves	350 units
Finished products:
Backyard Chef	30 units
Master Chef	36 units

c. Desired inventories at March 31:

Direct materials:
Grates	300 units
Stainless steel	1,500 lb.
Burner subassemblies	210 units
Shelves	400 units
Finished products:
Backyard Chef	40 units
Master Chef	26 units

d. Direct materials used in production:

In manufacture of Backyard Chef:
Grates	3 units per unit of product
Stainless steel	24 lb. per unit of product
Burner subassemblies	2 units per unit of product
Shelves	4 units per unit of product
In manufacture of Master Chef:
Grates	6 units per unit of product
Stainless steel	42 lb. per unit of product
Burner subassemblies	4 units per unit of product
Shelves	5 units per unit of product

e. Anticipated purchase price for direct materials:

Grates	$16 per unit
Stainless steel	$8 per lb.
Burner subassemblies	$120 per unit
Shelves	$12 per unit

f. Direct labor requirements:

Backyard Chef:
Stamping Department	0.50 hr. at $18 per hr.
Forming Department	0.60 hr. at $16 per hr.
Assembly Department	1.0 hr. at $15 per hr.
Master Chef:
Stamping Department	0.60 hr. at $18 per hr.
Forming Department	0.80 hr. at $16 per hr.
Assembly Department	1.50 hrs. at $15 per hr.

Required:

1. Prepare a sales budget for March.

Gourmet Grill Company Sales Budget For the Month Ending March 31
Product and Area		Unit Sales Volume	Unit Selling Price	Total Sales
Backyard Chef:
	Maine
	Vermont
	New Hampshire
	Total
Master Chef:
	Maine
	Vermont
	New Hampshire
	Total
Total revenue from sales

2. Prepare a production budget for March.

Gourmet Grill Company Production Budget For the Month Ending March 31
	Units
	Backyard Chef	Master Chef
Expected units to be sold
Plus desired inventory, March 31
Total
Less estimated inventory, March 1
Total units to be produced

3. Prepare a direct materials purchases budget for March.

Gourmet Grill Company Direct Materials Purchases Budget For the Month Ending March 31
	Grates (units)	Stainless Steel (lb.)	Burner Sub- assemblies (units)	Shelves (units)	Total
Required units for production:
Backyard Chef
Master Chef
Plus desired inventory, March 31
Total
Less estimated inventory, March 1
Total units to be purchased
Unit price
Total direct materials to be purchased

4. Prepare a direct labor cost budget for March.

Gourmet Grill Company Direct Labor Cost Budget For the Month Ending March 31
			Stamping Department		Forming Department		Assembly Department	Total
Hours required for production:
	Backyard Chef
	Master Chef
	Total
Hourly rate			$		$		$
Total direct labor cost			$		$		$	$

Answer 1

Gourmet Grill Company
Sales Budget
For the Month Ending March 31
Product and Area		Unit Sales	Unit Selling	Total Sales
		Volume	Price
Backyard Chef:
	Maine	350	800	280,000
	Vermont	400	825	330,000
	New Hampshire	320	850	272,000
	Total	1070		882,000
Master Chef:
	Maine	200	1400	280,000
	Vermont	240	1500	360,000
	New Hampshire	200	1600	320,000
	Total	640		960,000
Total revenue from sales				1,842,000
Gourmet Grill Company
Production Budget
For the Month Ending March 31
	Units
	Backyard Chef	Master Chef
Expected units to be sold	1070	640
Plus desired inventory, March 31	40	26
Total	1110	666
Less estimated inventory, March 1	30	36
Total units to be produced	1080	630
	Grates	Stainless Steel	Burner Sub-	Shelves	Total
	(units)	(lb.)	assemblies	(units)
			(units)
Required units for production:
Backyard Chef	3240	25920	2160	4320	35640
Master Chef	3780	26460	2520	3150	35910
Plus desired inventory, March 31	300	1500	210	400	2410
Total	7320	53880	4890	7870	73960
Less estimated inventory, March 1	320	1700	190	350	2560
Total units to be purchased	7000	52180	4700	7520	71400
Unit price	16	8	120	12
Total direct materials to be purchased	112,000	417,440	564,000	90,240	1,183,680
Gourmet Grill Company
Direct Labor Cost Budget
For the Month Ending March 31
		Stamping	Forming Department	Assembly Department	Total
		Department
Hours required for production:
	Backyard Chef	540	648	1080	2268
	Master Chef	378	504	945	1827
	Total	918	1152	2025	4095
Hourly rate		18	16	15
Total direct labor cost		16,524	18,432	30,375	65,331