Lame Specialties manufactures, among other things, woolen blankets for the athletic teams of the two local high schools. The company sews the blankets from fabric and sews on a logo patch purchased from the licensed logo store site. The teams are as follows: Knights, with red blankets and the Knights logo Raiders, with black blankets and the Raider logo

The budgeted direct-cost inputs for each product in 2014 are as follows:

Knights Blanket Raiders blanket

Red wool fabric 4 yards 0 yards

Black wool fabric 0 yards 5 yards

Knight logo patches 1 yard 0 yards

Raider logo patches 0 yards 1 yard

Direct manufacturing labor 3 hours 4 hours

Unit data pertaining to the direct materials for March 2014 are as follows:

Actual Beginning Direct Materials Inventory (3/1/2014)

Knight Blanket Raiders Blanket

Red wool fabric 35 yards 0 yards

Black wool fabric 0 yards 15 yards

Knight logo patches 45 yards 0 yards

raider logo patches 0 yards 60 yards

Target Ending Direct Materials Inventory (3/31/2014)

Knight blanket Raiders blanket

red wool fabric 25 yards 0 yards

black logo fabric 0 yards 25 yards

knight logo patches 25 yards 0 yards

radier logo patches 0 yards 25 yards

Unit cost data for direct-cost inputs pertaining to February 2014 and March 2014 are as follows:

February 2014 (actual) March 2014 (budgeted) Red wool fabric (per yard) $ 9 $10 Black wool fabric (per yard) 12 11 Knight logo patches (per patch) 7 7 Raider logo patches (per patch) 6 8 Manufacturing labor cost per hour 26 27

Manufacturing overhead (both variable and fixed) is allocated to each blanket on the basis of budgeted direct manufacturing labor-hours per blanket. The budgeted variable manufacturing overhead rate for March 2014 is $16 per direct manufacturing labor-hour. The budgeted fixed manufacturing overhead for March 2014 is $14,640. Both variable and fixed manufacturing overhead costs are allocated to each unit of finished goods. Data relating to finished goods inventory for March 2014 are as follows:

Knights Blankets Raiders Blankets Beginning inventory in units 12 17

Beginning inventory in dollars (cost) $1,440 $2,550

Target ending inventory in units 22 27

Budgeted sales for March 2014 are 130 units of the Knights blankets and 190 units of the Raiders blankets. The budgeted selling prices per unit in March 2014 are $229 for the Knights blankets and $296 for the Raiders blankets. Assume the following in your answer: Work-in-process inventories are negligible and ignored. Direct materials inventory and finished goods inventory are costed using the FIFO method. Unit costs of direct materials purchased and finished goods are constant in March 2014. Required 1. Prepare the following budgets for March 2014: a. Revenues budget b. Production budget in units c. Direct material usage budget and direct material purchases budget d. Direct manufacturing labor budget e. Manufacturing overhead budget f. Ending inventories budget (direct materials and finished goods) g. Cost of goods sold budget 2. Suppose Lame Specialties decides to incorporate continuous improvement into its budgeting process. Describe two areas where it could incorporate continuous improvement into the budget schedules in requirement 1.