1. Q: The production supervisor wants to purchase new production equipment for April 20X9. The goal is to replace the labor-intensive production system. Please Explain executive team: why new production equipment could affect the production and purchases budgets.

COMPANY

Sales Budget

For the Month Ending February 28, 20X9

Product and Area Unit Sales Volume Unit Salling Price Total Sales

King

Midwest Region 680 $820 $557,600

Southern Region 390 $820 $319,800

International Region 420 $870 $365,400

Total 1,490 $1,242,800

Queen

Midwest Region 850 $540 $459,000

Southern Region 480 $540 $259,200

International Region 330 $600 $198,000

Total 1,660 $916,200

Total revenue from sales $2,159,000

COMPANY

Production Budget

For the Month Ending February 28, 20X9

King Queen

Expected units to be sold 1,490 1,660

Plus desired inventory, Feb 28, 20X9 95 40

Total 1,585 1,700

Less estimated inventory, Feb 1, 20X9 105 35

Total units to be produced 1,480 1,665

COMPANY

Direct Materials Purchases Budget

For the Month Ending February 28, 20X9

Direct Materials

Fabric Wood Filler Springs Total

Required units for production:

King 6.5 42 4.6 18

Total units required 9,620 62,160 6,808 26,640 105,228

Queen 4.5 30 3.8 14

Total units required 7492.5 49,950 6,327 23,310 87079.5

Plus desired inventory, Feb 28, 20X9 430 680 350 660

Total 17,113 112,110 13,135 49,950 192,308

Less estimated inventory, Feb 1, 20X9 470 620 300 710

Total units to be purchased 16,643 111,490 12,835 49,240 190,208

Unit price 16 9.5 4.5 6.5

Total direct materials to be purchased 266,280 1,059,155 57,758 320,060 1,703,253

COMPANY

Direct Labor Cost Budget

For the Month Ending February 28, 20X9

Farming Dep Cutting Dep Upholstery Dep Total

Hours required production:

King 1,776 740 1,184 3,700

Queen 1,665 666 999 3,330

Total 3,441 1,406 2,183 7,030

Hourly rate $16 $19 $20

Total direct labor cost $55,056 $26,714 $43,660 $125,430