chapter 8

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 July is summarized as follows:

a. Estimated sales for July by sales territory:

Maine: Backyard Chef 310 units at $700 per unit Master Chef 150 units at $1,200 per unit Vermont: Backyard Chef 240 units at $750 per unit Master Chef 110 units at $1,300 per unit New Hampshire: Backyard Chef 360 units at $750 per unit Master Chef 180 units at $1,400 per unit

b. Estimated inventories at July 1:

Direct materials: Grates 290 units Stainless steel 1,500 lbs. Burner subassemblies 170 units Shelves 340 units Finished products: Backyard Chef 30 units Master Chef 32 units

c. Desired inventories at July 31:

Direct materials: Grates 340 units Stainless steel 1,800 lbs. Burner subassemblies 155 units Shelves 315 units Finished products: Backyard Chef 40 units Master Chef 22 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 $15 per unit Stainless steel $6 per lb. Burner subassemblies $110 per unit Shelves $10 per unit

f. Direct labor requirements:

Backyard Chef: Stamping Department 0.50 hr. at $17 per hr. Forming Department 0.60 hr. at $15 per hr. Assembly Department 1.00 hr. at $14 per hr. Master Chef: Stamping Department 0.60 hr. at $17 per hr. Forming Department 0.80 hr. at $15 per hr. Assembly Department 1.50 hrs. at $14 per hr.

Required:

1. Prepare a sales budget for July.

Gourmet Grill Company Sales Budget For the Month Ending July 31

Product and Area	Unit Sales Volume	Unit Selling Price	Total Sales
Backyard Chef:
Maine	fill in the blank 1	$fill in the blank 2	$fill in the blank 3
Vermont	fill in the blank 4	fill in the blank 5	fill in the blank 6
New Hampshire	fill in the blank 7	fill in the blank 8	fill in the blank 9
Total	fill in the blank 10		$fill in the blank 11
Master Chef:
Maine	fill in the blank 12	$fill in the blank 13	$fill in the blank 14
Vermont	fill in the blank 15	fill in the blank 16	fill in the blank 17
New Hampshire	fill in the blank 18	fill in the blank 19	fill in the blank 20
Total	fill in the blank 21		$fill in the blank 22
Total revenue from sales			$fill in the blank 23

2. Prepare a production budget for July. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Gourmet Grill Company Production Budget For the Month Ending July 31

Line Item Description	Backyard Chef	Master Chef
Expected units to be soldDesired inventory, July 31Total units availableEstimated inventory, July 1Total units to be producedExpected units to be sold	fill in the blank 25	fill in the blank 26
Expected units to be soldDesired inventory, July 31Total units availableEstimated inventory, July 1Total units to be producedDesired inventory, July 31	fill in the blank 28	fill in the blank 29
Expected units to be soldDesired inventory, July 31Total units availableEstimated inventory, July 1Total units to be producedTotal units available	fill in the blank 31	fill in the blank 32
Expected units to be soldDesired inventory, July 31Total units availableEstimated inventory, July 1Total units to be producedEstimated inventory, July 1	fill in the blank 34	fill in the blank 35
Expected units to be soldDesired inventory, July 31Total units availableEstimated inventory, July 1Total units to be producedTotal units to be produced	fill in the blank 37	fill in the blank 38

3. Prepare a direct materials purchases budget for July. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Gourmet Grill Company Direct Materials Purchases Budget For the Month Ending July 31

Line Item Description	Grates (units)	Stainless Steel (lbs.)	Burner Sub- assemblies (units)	Shelves (units)	Total
Required units for production:
Backyard Chef	fill in the blank 39	fill in the blank 40	fill in the blank 41	fill in the blank 42
Master Chef	fill in the blank 43	fill in the blank 44	fill in the blank 45	fill in the blank 46
Desired inventory, July 31	fill in the blank 47	fill in the blank 48	fill in the blank 49	fill in the blank 50
Total	fill in the blank 51	fill in the blank 52	fill in the blank 53	fill in the blank 54
Estimated inventory, July 1	fill in the blank 55	fill in the blank 56	fill in the blank 57	fill in the blank 58
Total units to be purchased	fill in the blank 59	fill in the blank 60	fill in the blank 61	fill in the blank 62
Unit price	$fill in the blank 63	$fill in the blank 64	$fill in the blank 65	$fill in the blank 66
Total direct materials to be purchased	$fill in the blank 67	$fill in the blank 68	$fill in the blank 69	$fill in the blank 70	$fill in the blank 71

4. Prepare a direct labor cost budget for July.

Gourmet Grill Company Direct Labor Cost Budget For the Month Ending July 31

Line Item Description	Stamping Department	Forming Department	Assembly Department	Total
Hours required for production:
Backyard Chef	fill in the blank 72	fill in the blank 73	fill in the blank 74
Master Chef	fill in the blank 75	fill in the blank 76	fill in the blank 77
Total	fill in the blank 78	fill in the blank 79	fill in the blank 80
Hourly rate	$fill in the blank 81	$fill in the blank 82	$fill in the blank 83
Total direct labor cost	$fill in the blank 84	$fill in the blank 85	$fill in the blank 86	$fill in the blank 87