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CHAPTER 5: PLANNING AND FORECASTING IN A MANUFACTURING SETTING Question 1. Integrated production budget, purchases budget, and direct labor budget Lagitele Furniture builds high-end hand-made dining tables. Lagi Fiu, the company's owner, has developed the following sales forecast for 2022. 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Forecasted sales 2,700 3,000 2,800 1,900 (tables) Because of the time needed to create each table, Lagitele maintains an ending Finished Goods Inventory of 20% of the following quarter's budgeted sales. Lagitele has been following this inventory policy for several years. The company ended 2021 with 475 tables on hand. The standard cost card for a table is as follows: Standard Quantity Standard Price Total Standard Cost Australian cherry wood 20 board feet $4/board foot $80 Australian cherry turning 4 squares $8/square 32 square (legs) Direct labor 8 DLH $15/DLH 120 Variable overhead 8 DLH $45/DLH 360 Fixed overhead 8 DLH $12/DLH 96 $688 Required; a. Prepare Lagitele's production budget for 2022. Assume that the desired ending inventory for 2022 is 500 tables. b. Lagitele maintains inventory of Australian cherry wood equal to 10% of the following quarter's production needs. On December 31, 2021, Lagitele's physical inventory count showed 4,800 board feet of Australian cherry. Due to an anticipated price increase in 2023, managers want to have 5,000 board feet of Australian cherry wood in inventory on December 31, 2022. Prepare Lagitele's 2022 direct materials purchases budget for Australian cherry wood. c. Prepare Lagitele's direct labor budget for 2022. d. Assume that because of the skill level required to make the tables, Lagitele cannot easily hire additional workers to handle peaks in demand. Consequently, the company maintains a steady workforce of 40 employees and guarantees each worker 500 hours per quarter. For any additional time required to complete the scheduled production, these same workers earn 1.5 times their normal hourly rate. Prepare Lagitele's direct labor budget for 2022