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:

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

	Knights Blanket		Raiders Blanket
Red wool fabric	9	yards	0	yards
Black wool fabric	0		10
Knight logo patches	1		0
Raider logo patches	0		1
Direct manufacturing labor	8	hours	9	hours

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

Actual Beginning Direct Materials Inventory (3/1/2014)
	Knights Blanket		Raiders Blanket
Red wool fabric	60	yards	0	yards
Black wool fabric	0		40
Knight logo patches	70		0
Raider logo patches	0		85

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

	Knights Blanket		Raiders Blanket
Red wool fabric	50	yards	0	yards
Black wool fabric	0		50
Knight logo patches	50		0
Raider logo patches	0		50

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)	$14		$15
Black wool fabric (per yard)	22		21
Knight logo patches (per patch)	12		12
Raider logo patches (per patch)	11		13
Manufacturing labor cost per hour	31		32

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 $21 per direct manufacturing labor-hour. The budgeted fixed manufacturing overhead for March 2014 is $24,815. 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 Blanket		Raiders Blanket
Beginning inventory in units	22		27
Beginning inventory in dollars (cost)	$3,960		$4,293
Target ending inventory in units	32		37

Budgeted sales for March 2014 are 180 units of the Knights blankets and 215 units of the Raiders blankets. The budgeted selling prices per unit in March 2014 are $709 for the Knights blankets and $816 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
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 Lee 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.

times Knights, with red blankets and the Knights logo

times Raiders, with black blankets and the Raider logo

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