Question

13. 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 July is summarized as follows:

    a. Estimated sales for July by sales territory:

    Maine:
    Backyard Chef	310 units at $700 per unit
    Master Chef	150 units at $1,200 per unit
    Vermont:
    Backyard Chef	240 units at $750 per unit
    Master Chef	110 units at $1,300 per unit
    New Hampshire:
    Backyard Chef	360 units at $750 per unit
    Master Chef	180 units at $1,400 per unit

    b. Estimated inventories at July 1:

    Direct materials:
    Grates	290 units
    Stainless steel	1,500 lbs.
    Burner subassemblies	170 units
    Shelves	340 units
    Finished products:
    Backyard Chef	30 units
    Master Chef	32 units

    c. Desired inventories at July 31:

    Direct materials:
    Grates	340 units
    Stainless steel	1,800 lbs.
    Burner subassemblies	155 units
    Shelves	315 units
    Finished products:
    Backyard Chef	40 units
    Master Chef	22 units

    d. Direct materials used in production:

    In manufacture of Backyard Chef:
    Grates	3 units per unit of product
    Stainless steel	24 lbs. 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 lbs. 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	$15 per unit
    Stainless steel	$6 per lb.
    Burner subassemblies	$110 per unit
    Shelves	$10 per unit

    f. Direct labor requirements:

    Backyard Chef:
    Stamping Department	0.50 hr. at $17 per hr.
    Forming Department	0.60 hr. at $15 per hr.
    Assembly Department	1.00 hr. at $14 per hr.
    Master Chef:
    Stamping Department	0.60 hr. at $17 per hr.
    Forming Department	0.80 hr. at $15 per hr.
    Assembly Department	1.50 hrs. at $14 per hr.

    Required:

    1. Prepare a sales budget for July.

    Gourmet Grill Company Sales Budget For the Month Ending July 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 July. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

    Gourmet Grill Company Production Budget For the Month Ending July 31
    	Units
    	Backyard Chef	Master Chef

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

    Gourmet Grill Company Direct Materials Purchases Budget For the Month Ending July 31
    	Grates (units)	Stainless Steel (lbs.)	Burner Sub- assemblies (units)	Shelves (units)	Total
    Required units for production:
    Backyard Chef
    Master Chef
    Desired inventory, July 31
    Total
    Estimated inventory, July 1
    Total units to be purchased
    Unit price	$	$	$	$
    Total direct materials to be purchased	$	$	$	$	$

    4. Prepare a direct labor cost budget for July.

    Gourmet Grill Company Direct Labor Cost Budget For the Month Ending July 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

1)

Gourmet Grill Company
Sales Budget
For the Month Ending July 31
Product and Area		Unit Sales	Unit Selling	Total Sales
		Volume	Price
Backyard Chef:
	Maine	310.00	700.00	217,000.00
	Vermont	240.00	750.00	180,000.00
	New Hampshire	360.00	750.00	270,000.00
	Total	910.00		667,000.00
Master Chef:
	Maine	150.00	1,200.00	180,000.00
	Vermont	110.00	1,300.00	143,000.00
	New Hampshire	180.00	1,400.00	252,000.00
	Total	440.00		575,000.00
Total revenue from sales				1,242,000.00

2)

Gourmet Grill Company
Production Budget
For the Month Ending July 31
	Units
	Backyard Chef	Master Chef
Expected Units to be Sold	910.00	440.00
Plus:Desired Inventory July 31	40.00	22.00
Total	950.00	462.00
Less: Estimated Inventory July 1	30.00	32.00
Total units to be Produced	920.00	430.00

3)

Gourmet Grill Company
Direct Materials Purchases Budget
For the Month Ending July 31
	Grates	Stainless Steel	Burner Sub-	Shelves	Total
	(units)	(lbs.)	assemblies	(units)
			(units)
Required units for production:
Backyard Chef	2,760.00	22,080.00	1,840.00	3,680.00
Master Chef	2,580.00	18,060.00	1,720.00	2,150.00
Desired inventory, July 31	340.00	1,800.00	155.00	315.00
Total	5,680.00	41,940.00	3,715.00	6,145.00
Estimated inventory, July 1	290.00	1,500.00	170.00	340.00
Total units to be purchased	5,390.00	40,440.00	3,545.00	5,805.00
Unit price	15.00	6.00	110.00	10.00
Total direct materials to be purchased	80,850.00	242,640.00	389,950.00	58,050.00	771,490.00

4)

Gourmet Grill Company
Direct Labor Cost Budget
For the Month Ending July 31
		Stamping	Forming Department	Assembly Department	Total
		Department
Hours required for production:
	Backyard Chef	460.00	552.00	920.00
	Master Chef	258.00	344.00	645.00
	Total	718.00	896.00	1,565.00
Hourly rate		17.00	15.00	14.00
Total direct labor cost		12,206.00	13,440.00	21,910.00	47,556.00