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eBook Print Item Sales, Production, Direct Materials Purchases, and Direct Labor Cost Budgets The budget director of Royal Furniture Company requests estimates of sales, production,
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Sales, Production, Direct Materials Purchases, and Direct Labor Cost Budgets
The budget director of Royal Furniture Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales and production for February is summarized as follows:
a. Estimated sales of King and Prince chairs for February by sales territory:
| Northern Domestic: | |
| King | 610 units at $780 per unit |
| Prince | 750 units at $550 per unit |
| Southern Domestic: | |
| King | 340 units at $780 per unit |
| Prince | 440 units at $550 per unit |
| International: | |
| King | 360 units at $850 per unit |
| Prince | 290 units at $600 per unit |
b. Estimated inventories at February 1:
| Direct materials: | |
| Fabric | 420 sq. yds. |
| Wood | 580 linear ft. |
| Filler | 250 cu. ft. |
| Springs | 660 units |
| Finished products: | |
| King | 90 units |
| Prince | 25 units |
c. Desired inventories at February 28:
| Direct materials: | |
| Fabric | 390 sq. yds. |
| Wood | 650 linear ft. |
| Filler | 300 cu. ft. |
| Springs | 540 units |
| Finished products: | |
| King | 80 units |
| Prince | 35 units |
d. Direct materials used in production:
| In manufacture of King: | |
| Fabric | 6.0 sq. yds. per unit of product |
| Wood | 38 linear ft. per unit of product |
| Filler | 4.2 cu. ft. per unit of product |
| Springs | 16 units per unit of product |
| In manufacture of Prince: | |
| Fabric | 4.0 sq. yds. per unit of product |
| Wood | 26 linear ft. per unit of product |
| Filler | 3.4 cu. ft. per unit of product |
| Springs | 12 units per unit of product |
e. Anticipated purchase price for direct materials:
| Fabric | $12.00 | per sq. yd. |
| Wood | 7.00 | per linear ft. |
| Filler | $3.00 | per cu. ft. |
| Springs | 4.50 | per unit |
f. Direct labor requirements:
| King: | |
| Framing Department | 1.2 hrs. at $12 per hr. |
| Cutting Department | 0.5 hr. at $14 per hr. |
| Upholstery Department | 0.8 hr. at $15 per hr. |
| Prince: | |
| Framing Department | 1.0 hr. at $12 per hr. |
| Cutting Department | 0.4 hr. at $14 per hr. |
| Upholstery Department | 0.6 hr. at $15 per hr. |
Required:
1. Prepare a sales budget for February.
| Royal Furniture Company Sales Budget For the Month Ending February 28 | ||||
|---|---|---|---|---|
| Product and Area | Unit Sales Volume | Unit Selling Price | Total Sales | |
| King: | ||||
| Northern Domestic | ||||
| Southern Domestic | ||||
| International | ||||
| Total | ||||
| Prince: | ||||
| Northern Domestic | ||||
| Southern Domestic | ||||
| International | ||||
| Total | ||||
| Total revenue from sales |
2. Prepare a production budget for February. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
| Royal Furniture Company Production Budget For the Month Ending February 28 | ||
|---|---|---|
| Units | ||
| King | Prince | |
| Expected units to be soldDesired inventory, February 28Total units availableEstimated inventory, February 1Total units to be produced | ||
| Expected units to be soldDesired inventory, February 28Total units availableEstimated inventory, February 1Total units to be produced | ||
| Expected units to be soldDesired inventory, February 28Total units availableEstimated inventory, February 1Total units to be produced | ||
| Expected units to be soldDesired inventory, February 28Total units availableEstimated inventory, February 1Total units to be produced | ||
| Expected units to be soldDesired inventory, February 28Total units availableEstimated inventory, February 1Total units to be produced |
3. Prepare a direct materials purchases budget for February. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
| Royal Furniture Company Direct Materials Purchases Budget For the Month Ending February 28 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| Direct Materials | |||||||||
| Fabric (sq. yds.) | Wood (linear ft.) | Filler (cu. ft.) | Springs (units) | Total | |||||
| Required units for production: | |||||||||
| King | |||||||||
| Prince | |||||||||
| Desired inventory, February 28 | |||||||||
| Total | |||||||||
| Estimated inventory, February 1 | |||||||||
| Total units to be purchased | |||||||||
| Unit price | |||||||||
| Total direct materials to be purchased |
4. Prepare a direct labor cost budget for February.
| Royal Furniture Company Direct Labor Cost Budget For the Month Ending February 28 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Framing Department | Cutting Department | Upholstery Department | Total | |||||
| Hours required for production: | ||||||||
| King | ||||||||
| Prince | ||||||||
| Total | ||||||||
| Hourly rate | ||||||||
| Total direct labor cost |
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Income Tax Fundamentals 2013
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
