PR 21-2A Sales, production, direct materials purchases, and direct labor cost budgets

Instructions

1. Prepare a sales budget for July.

2. Prepare a production budget for July.

3. Prepare a direct materials purchases budget for July.

4. Prepare a direct labor cost budget for July.

The budget director of Gourmet Grill Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales and production for July is summarized as follows:

A.Estimated sales for July by sales territory:

Maine:

Backyard Chef 310 units at $700 per unit

Master Chef 150 units at $1,200 per unit

Vermont:

Backyard Chef 240 units at $750 per unit

Master Chef 110 units at $1,300 per unit

New Hampshire:

Backyard Chef 360 units at $7550 per unit

Master Chef 180 units at $1,400 per unit

B.Estimated inventories at July 1:

Direct materials:

Grates290 units

Stainless steel1,500 lbs.

Burner subassemblies170 units

Shelves 340 units

Finished products:

Backyard Chef 30 units

Master Chef32 units

C.Desired inventories at July 31:

Direct materials:

Grates 340 units

Stainless steel 1,800 lbs.

Burner subassemblies155 units

Shelves 315 units

D.Direct materials used in production:

In manufacture of Backyard Chef:

Grates 3 units per unit of product

Stainless steel24 lbs. per unit of product

Burner subassemblies2 units per unit of product

Shelves4 units per unit of product

In manufacture of Master Chef:

Grates 6 units per unit of product

Stainless steel42 lbs. per unit of product

Burner subassemblies4 units per unit of product

Shelves5 units per unit of product

E.Anticipated purchase price for direct materials:

Grates $15 per unit

Stainless steel $6 per lb.

Burner subassemblies$110 per unit

Shelves$10 per unit

F.Anticipated purchase price for direct materials:

Backyard chef:

Stamping department0.50 hr. at $17 per hr.

Forming department0.60 hr. at $15 per hr.

Assembly department1.00 hr. at $14 per hr.

Master chef:

Stamping department0.60 hr. at $17 per hr.

Forming department0.80 hr. at $15 per hr.

Assembly department1.50 hrs. at $14 per hr.