Question

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 March is summarized as follows:

a. Estimated sales for March by sales territory:

Maine:
Backyard Chef	350 units at $800 per unit
Master Chef	200 units at $1,400 per unit
Vermont:
Backyard Chef	400 units at $825 per unit
Master Chef	240 units at $1,500 per unit
New Hampshire:
Backyard Chef	320 units at $850 per unit
Master Chef	200 units at $1,600 per unit

b. Estimated inventories at March 1:

Direct materials:
Grates	320 units
Stainless steel	1,700 lbs.
Burner subassemblies	190 units
Shelves	350 units
Finished products:
Backyard Chef	30 units
Master Chef	36 units

c. Desired inventories at March 31:

Direct materials:
Grates	300 units
Stainless steel	1,500 lbs.
Burner subassemblies	210 units
Shelves	400 units
Finished products:
Backyard Chef	40 units
Master Chef	26 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	$16 per unit
Stainless steel	$8 per lb.
Burner subassemblies	120 per unit
Shelves	$12 per unit

f. Direct labor requirements:

Backyard Chef:
Stamping Department	0.50 hr. at $18 per hr.
Forming Department	0.60 hr. at $16 per hr.
Assembly Department	1.0 hr. at $15 per hr.
Master Chef:
Stamping Department	0.60 hr. at $18 per hr.
Forming Department	0.80 hr. at $16 per hr.
Assembly Department	1.50 hrs. at $15 per hr.

Required:

1. Prepare a sales budget for March.

Gourmet Grill Company Sales Budget For the Month Ending March 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 March.

Gourmet Grill Company Production Budget For the Month Ending March 31,
	Units
	Backyard Chef	Master Chef
Expected units to be sold
Plus desired inventory, March 31,
Total
Less estimated inventory, March 1,
Total units to be produced

3. Prepare a direct materials purchases budget for March.

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

4. Prepare a direct labor cost budget for March.

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

. Gourmet Grill Company Direct Materials Purchases Budget For the Month Ending July 31, 2014 Grates Stainless Steel Burner Sub- Shelves Total (units) (lbs.) assemblies (units) (units) Required units for production: Backyard Chef 2760 22080 1840 3680 30360 Master Chef 2580 18060 1720 2150 24510 Plus desired inventory, July 31, 2014 340 1800 155 315 2610 Total 5680 41940 3715 6145 57480 Less estimated inventory, July 1, 2014 290 1500 170 340 2300 Total units to be purchased 5390 40440 3545 5805 55180 Unit price 15 6 110 10 Total direct materials to be purchased 80850 242640 389950 58050 771490 4. Prepare a direct labor cost budget for July. Gourmet Grill Company Direct Labor Cost Budget For the Month Ending July 31, 2014 Stamping Forming Department Assembly Department Total Department Hours required for production: Backyard Chef 460 552 920 1932 Master Chef 258 344 645 1247 Total 718 896 1565 3179 Hourly rate 17 15 14 Total direct labor cost 12206 13440 21910 47556