Question

In: Accounting

Scholastic Furniture, Inc. manufactures a variety of desks, chairs, tables, and shelf units that are sold...

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

Solutions

Expert Solution

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

Feel free to ask any clarification, if required. Kindly provide feedback by thumbs up, if satisfied. It will be highly appreciated.
Thank you.


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