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.

   Royal Furniture Company Production Budget For the Month Ending February 28
   	Units
   	King	Prince
   Expected units to be sold
   Plus desired inventory, February 28
   Total units required
   Less 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.

   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
   Plus desired inventory, February 28
   Total units required
   Less 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 hours required
   Hourly rate
   Total direct labor cost

Answer 1

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	610	780	475800
	Southern Domestic	340	780	265200
	International	360	850	306000
	Total	1310		1047000
Prince:
	Northern Domestic	750	550	412500
	Southern Domestic	440	550	242000
	International	290	600	174000
	Total	1480		828500
Total revenue from sales		[1047000+828500]1875500

Royal Furniture Company Production Budget For the Month Ending February 28
	Units
	King	Prince
Expected units to be sold	1310	1480
Plus desired inventory, February 28	80	35
Total units required	1390[1310+80]	1515[1480+35]
Less estimated inventory, February 1	90	25
Total units to be produced	1300[1390-90]	1490[1515-25]

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		7800 [1300units*6]		49400 [1300*38linear ft]		5460 [1300*4.2cu]		20800 [1300*16units]
Prince		5960 [1490units*4]		38740 [1490*26]		5066 [1490*3.4]		17880 [1490*12]
Plus desired inventory, February 28		390		650		300		540
Total units required		14150[7800+5960+390]		88790[49400+38740+650]		10826[5460+5066+300]		39220[20800+17880+540]
Less estimated inventory, February 1		420		580		250		660
Total units to be purchased		13730[14150-420]		88210[88790-580]		10576[10826-250]		38560[39220-660]
Unit price		12		7$		3		4.5$
Total direct materials to be purchased		164760 [13730*12]		617470 [88210*7]		31728 [10576*3]		173520 [38560*4.5]	987478

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		1560 [1300units to be produced*1.2hrs]		650 [1300*0.5]		1040 [1300*0.8hr]
	Prince		1490 [1490*1hr]		596 [1490*0.4hr]		894 [1490*0.6hr]
	Total hours required		3050		1246		1934
Hourly rate			12		14		15
Total direct labor cost			36600 [3050hours*12$]		17444 [1246hours*14$]		29010 [1934hours*15$]	83054 [36600+17444+29010]