Question

Scholastic Furniture, Inc. manufactures a variety of desks, chairs, tables, and shelf units that are sold to public school systems throughout the Midwest. The controller of the company’s Desk Division is currently preparing a budget for the second quarter of the year. The following sales forecast has been made by the division’s sales manager.

April	10,000	desk-and-chair sets
May	12,000	desk-and-chair sets
June	15,000	desk-and-chair sets

Each desk-and-chair set requires 10 board feet of pine planks and 1.5 hours of direct labor. Each set sells for $50. Pine planks cost $.50 per board foot, and the division ends each month with enough wood to cover 10 percent of the next month’s production requirements. The division incurs a cost of $20 per hour for direct-labor wages and fringe benefits. The division ends each month with enough finished-goods inventory to cover 20 percent of the next month’s sales.

Required:

Complete the following budget schedules.

1. Sales budget.

2. Production budget (in sets).

3. Raw-material purchases.

4. Direct-labor budget.

Complete this question by entering your answers in the tabs below.

• Required 1
• Required 2
• Required 3
• Required 4

Sales budget:

	April May June Sales (in sets) 10,000 Sales price per set $50 Sales revenue $500,000 $0 $0

Production budget (in sets):

	April May June Sales 10,000 Add: Desired ending inventory 2,400 3,000 Total requirements 12,400 0 3,000 Less: Projected beginning inventory 2,000 Planned production 10,400 0 3,000

Raw-material purchases: (Round "Cost per board foot" to 2 decimal places.)

April May June Planned production (sets) 10,400 Raw material required per set (board feet) 10 Raw material required for production (board feet) 104,000 0 0 Add: Desired ending inventory of raw material, in board feet (10% of next month’s requirement) 12,600 16,000 Total requirements 116,600 0 16,000 Less: Projected beginning inventory of raw material, in board feet (10% of current month’s requirement) 10,400 Planned purchases of raw material (board feet) 106,200 0 16,000 Cost per board foot $0.50 Planned purchases of raw material (dollars) $53,100 $0 $0

Direct-labor budget: (Round "Direct labor hours per set" to 1 decimal place.)

	April May June Planned production (sets) 10,400 Direct-labor hours per set 1.5 Direct-labor hours required 15,600 0 0 Cost per hour $20 Planned direct-labor cost $312,000 $0 $0

Answer 1

1. Sales Budget:-
Scholastic Furniture, Inc.
Sales Budget
		April	May	June
	Sales (in sets)	10,000	12,000	15,000
	Selling Price per Unit	$                                 50.00	$                                50.00	$                                50.00
	Sales Revenue	$                             500,000	$                            600,000	$                            750,000
2. Production Budget:-
Scholastic Furniture, Inc.
Production Budget (in sets)
		April	May	June
	Sales (in sets)	10,000	12,000	15,000
Add:	Desired Ending Finished Goods Inventory (20% of next month's unit sales)	2400	3000	3000
	Total requirements	12,400	15,000	18,000
Less:	Beginning Finished Goods Inventory	2,000	2,400	3,000
	Planned production	10,400	12,600	15,000
		April	May	June
a	Next month's unit sales	12,000	15,000
b	Desired Ending Finished Goods Inventory (20% of next month's unit sales) (a*20%)	2400	3000	3000
c	Desired Beginning Finished Goods Inventory	2000	2400	3000
*Beginning finished goods inventory = Ending FG inventory of previous month
3. Raw Materials Purchases Budget:-
Scholastic Furniture, Inc.
Raw Materials Purchases Budget
		April	May	June
	Planned production (sets)	10,400	12,600	15,000
	Raw material required per set (board feet)	10	10	10
	Raw material required for production (board feet)	104,000	126,000	150,000
Add:	Add: Desired ending inventory of raw material, in board feet (10% of next month’s requirement)	12,600	15,000	16,000
	Total requirements	116,600	141,000	166,000
Less:	Less: Projected beginning inventory of raw material, in board feet (10% of current month’s requirement)	10,400	12,600	15,000
	Planned purchases of raw material (board feet)	106,200	128,400	151,000
	Cost per board foot	$                                   0.50	$                                  0.50	$                                  0.50
	Planned purchases of raw material (dollars)	$                               53,100	$                              64,200	$                              75,500
		April	May	June
a	Next Month's Production in units	12,600	15,000
b	Raw material required per set (board feet)	10	10
c	Materials needed for the next month's production (a*b)	126,000	150,000
d	Desired Ending Raw Materials Inventory (10% of the materials needed for the next month) (c*10%)	12600	15000	16000
*Ending Raw Materials inventory = Beginning Raw Materials inventory of next month
4. Direct Labor Budget:-
Scholastic Furniture, Inc.
Schedule of Direct Labor Budget
		April	May	June
	Planned production (sets)	10,400	12,600	15,000
	Direct-labor hours per set	1.5	1.5	1.5
	Direct-labor hours required	15600	18900	22500
	Cost per hour	$                                       20	$                                      20	$                                      20
	Planned direct-labor cost	$                             312,000	$                            378,000	$                            450,000

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