Lee 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:

	Broncos, with red blankets and the Broncos logo
	Rams, with black blankets and the Rams logo

Also, the black blankets are slightly larger than the red blankets.

The budgeted direct-cost inputs for each product in

2017

are as follows:

	Broncos Blanket		Rams Blanket
Red wool fabric	4	yards	0	yards
Black wool fabric	0		5
Broncos logo patches	1		0
Rams logo patches	0		1
Direct manufacturing labour	3	hours	4	hours

Unit data pertaining to the direct materials for March2017 are as follows:

Actual Beginning Direct Materials Inventory (3/1/2017)
	Broncos Blanket		Rams Blanket
Red wool fabric	35	yards	0	yards
Black wool fabric	0		15
Broncos logo patches	45		0
Rams logo patches	0		60

Target Ending Direct Materials Inventory (3/31/2017)
	Broncos Blanket		Rams Blanket
Red wool fabric	25	yards	0	yards
Black wool fabric	0		25
Broncos logo patches	25		0
Rams logo patches	0		25

Unit cost data for direct-cost inputs pertaining to February 2017 and March 2017 are as follows:

	February 2017 (actual)		March 2017 (budgeted)
Red wool fabric (per yard)	$9		$10
Black wool fabric (per yard)	12		11
Broncos logo patches (per patch)	7		7
Rams logo patches (per patch)	6		8
Manufacturing labour cost per hour	26		27

Manufacturing overhead (both variable and fixed) is allocated to each blanket on the basis of budgeted direct manufacturing labour-hours per blanket. The budgeted variable manufacturing overhead rate for March 2017 is $16 per direct manufacturing labour-hour. The budgeted fixed manufacturing overhead for March 2017 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 2017 are as follows:

	Broncos Blanket		Rams Blanket
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 2017 are 130 units of the Broncos blankets and 190 units of the Rams blankets. The budgeted selling prices per unit in March 2017 are $229 for the Broncos blankets and $296 for the Rams 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 2017.

Required

1.	Prepare the following budgets for March 2017:

	a.	Revenues budget
	b.	Production budget in units
	c.	Direct material usage budget and direct material purchases budget
	d.	Direct manufacturing labour costs budget
	e.	Manufacturing overhead costs budget
	f.	Ending inventories budget (direct materials and finished goods)
	g.	Cost of goods sold budget

2.	SupposeLee 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.