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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	fill in the blank 1	$fill in the blank 2	$fill in the blank 3
	Southern Domestic	fill in the blank 4	fill in the blank 5	fill in the blank 6
	International	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
Prince:
	Northern Domestic	fill in the blank 12	$fill in the blank 13	$fill in the blank 14
	Southern Domestic	fill in the blank 15	fill in the blank 16	fill in the blank 17
	International	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 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	fill in the blank 25	fill in the blank 26
Expected units to be soldDesired inventory, February 28Total units availableEstimated inventory, February 1Total units to be produced	fill in the blank 28	fill in the blank 29
Expected units to be soldDesired inventory, February 28Total units availableEstimated inventory, February 1Total units to be produced	fill in the blank 31	fill in the blank 32
Expected units to be soldDesired inventory, February 28Total units availableEstimated inventory, February 1Total units to be produced	fill in the blank 34	fill in the blank 35
Expected units to be soldDesired inventory, February 28Total units availableEstimated inventory, February 1Total units to be produced	fill in the blank 37	fill in the blank 38

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		fill in the blank 39		fill in the blank 40		fill in the blank 41		fill in the blank 42
Prince		fill in the blank 43		fill in the blank 44		fill in the blank 45		fill in the blank 46
Desired inventory, February 28		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, February 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 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		fill in the blank 72		fill in the blank 73		fill in the blank 74
	Prince		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