Question

1. Sales, Production, Direct Materials Purchases, and Budget that estimates direct labor hours and related costs needed to support budgeted production.Direct Labor Cost Budgets

   The An accounting device used to plan and control resources of operational departments and divisions.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 One of the major elements of the income statement budget that indicates the quantity of estimated sales and the expected unit selling price.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 A budget of estimated unit production.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
   Expected units to be sold Desired inventory, February 28 Total units available Estimated inventory, February 1 Total units to be produced
   Expected units to be sold Desired inventory, February 28 Total units available Estimated inventory, February 1 Total units to be produced
   Expected units to be sold Desired inventory, February 28 Total units available Estimated inventory, February 1 Total units to be produced
   Expected units to be sold Desired inventory, February 28 Total units available Estimated inventory, February 1 Total units to be produced
   Expected units to be sold Desired inventory, February 28 Total units available Estimated inventory, February 1 Total units to be produced

   3. Prepare a A budget that uses the production budget as a starting point to budget materials purchases.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 Budget that estimates direct labor hours and related costs needed to support budgeted production.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			$		$		$	$

Answer 1

• [1]

Sales Budget
For the Month Ending February 28
Product and Area		Unit Sales	Unit Selling	Total Sales
		Volume	Price
King:
	Northern Domestic	610	$780	$475,800
	Southern Domestic	340	$780	$265,200
	International	360	$850	$306,000
	Total	1310		$1,047,000
Prince:
	Northern Domestic	750	$550	$412,500
	Southern Domestic	440	$550	$242,000
	International	290	$600	$174,000
	Total	1480		$828,500
Total revenue from sales				$1,875,500

• [2]

Royal Furniture Company
Production Budget
For the Month Ending February 28
	Units
	King	Prince
Expected units to be sold	1,310	1,480
Desired inventory, February 28	80	35
Total units available	1,390	1,515
Estimated inventory, February 1	(90)	(25)
Total units to be produced	1,300	1,490

• [3]

Royal Furniture Company
Direct Materials Purchases Budget
For the Month Ending February 28
	Direct Materials
		Fabric		Wood		Filler		Springs	Total
		(sq. yds.)		(linear ft.)		(cu. ft.)		(units)
Required units for production:
King		7,800		49,400		5,460		20,800	83,460
Prince		5,960		38,740		5,066		17,880	67,646
Desired inventory, February 28		390		650		300		540
Total		14,150		88,790		10,826		39,220
Estimated inventory, February 1		(420)		(580)		(250)		(660)
Total units to be purchased		13,730		88,210		10,576		38,560
Unit price		$12.00		$7.00		$3.00		$4.50
Total direct materials to be purchased		$164,760		$617,470		$31,728		$173,520	$987,478

• [4]

Royal Furniture Company
Direct Labor Cost Budget
For the Month Ending February 28
			Framing		Cutting		Upholstery	Total
			Department		Department		Department
Hours required for production:
	King		1,560		650		1,040	3,250
	Prince		1,490		596		894	2,980
	Total		3,050		1,246		1,934	6,230
Hourly rate			$12.00		$14.00		$15.00
Total direct labor cost			$36,600		$17,444		$29,010	$83,054