Question
New Production Equipment Purchase The budget director of the Freeman Furniture Company requests estimates of sales, production, and other operating data from the various administrative
New Production Equipment Purchase
The budget director of the Freeman Furniture Company requests estimates of sales, production, and other operating data from the various administrative units every month.
Selected information concerning sales and production data for February 20X9 is presented below.
- Estimated Sales of King and Queens Chairs for February by Sales Territory
Midwest Region
King680 units at $820 per unitQueens850 units at $540 per unit
Southern Region
King390 units at $820 per unitQueens480 units at 4540 per unit
International Region
King420 units at $870 per unitQueens330 units at $600 per unit
- Estimated Inventories at February 1, 20X9
Direct Materials
Fabric470 square yardsWood620 linear ftFiller300 cubic ftSprings710 units
Finished Products
King105 unitsQueens35 units
- Desired Inventories at February 28, 20X9
Direct Materials
Fabric430 square yardsWood680 linear ftFiller350 cubic ftSprings660 units
Finished Products
King95 unitsQueens40 units
- Direct Materials Used in Production
In Manufacture of King
Fabric6.5 square yards per unit of productWood42 linear ft per unit of productFiller4.6 cubic ft per unit of productSprings18 units per unit of product
In Manufacture of Queens
Fabric4.5 square yards per unit of productWood30 linear ft per unit of productFiller3.8 cubic ft per unit of productSprings14 units per unit of product
- Anticipated Purchase Price for Direct Materials for Both Products
Fabric$16.00 per square yearWood$9.50 per linear ftFiller$4.50 per cubicSprings
- Direct Labor Requirements
King
Framing Department1.2 hours at $16 per hourCutting Department0.5 hours at $19 per hourUpholstery Department0.8 hours at $20 per hour
Queens
Framing Department1.0 hours at $16 per hourCutting Department0.4 hours at $19 per hourUpholstery Department0.6 hours at $20 per hour
- sales budget for February 20X9.
- production budget for February 20X9.
- direct materials purchases budget for February 20X9.
- direct labor budget for February 20X9.
- The production supervisor wants to purchase new production equipment for April 20X9. The goal is to replace the labor-intensive production system. Please memo to the executive team explaining why new production equipment could affect the production and purchases budgets.
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