Sales, Production, Direct Materials Purchases, and Direct Labor Cost Budgets

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

a. Estimated sales of King and Prince chairs for February by sales territory:

Northern Domestic:
King	610 units at $780 per unit
Prince	750 units at $550 per unit
Southern Domestic:
King	340 units at $780 per unit
Prince	440 units at $550 per unit
International:
King	360 units at $850 per unit
Prince	290 units at $600 per unit

b. Estimated inventories at February 1:

Direct materials:
Fabric	420 sq. yds.
Wood	580 linear ft.
Filler	250 cu. ft.
Springs	660 units
Finished products:
King	90 units
Prince	25 units

c. Desired inventories at February 28:

Direct materials:
Fabric	390 sq. yds.
Wood	650 linear ft.
Filler	300 cu. ft.
Springs	540 units
Finished products:
King	80 units
Prince	35 units

d. Direct materials used in production:

In manufacture of King:
Fabric	6.0 sq. yds. per unit of product
Wood	38 linear ft. per unit of product
Filler	4.2 cu. ft. per unit of product
Springs	16 units per unit of product
In manufacture of Prince:
Fabric	4.0 sq. yds. per unit of product
Wood	26 linear ft. per unit of product
Filler	3.4 cu. ft. per unit of product
Springs	12 units per unit of product

e. Anticipated purchase price for direct materials:

Fabric	$12.00	per sq. yd.
Wood	7.00	per linear ft.
Filler	$3.00	per cu. ft.
Springs	4.50	per unit

f. Direct labor requirements:

King:
Framing Department	1.2 hrs. at $12 per hr.
Cutting Department	0.5 hr. at $14 per hr.
Upholstery Department	0.8 hr. at $15 per hr.
Prince:
Framing Department	1.0 hr. at $12 per hr.
Cutting Department	0.4 hr. at $14 per hr.
Upholstery Department	0.6 hr. at $15 per hr.

Required:

1. Prepare a sales budget for February.

Royal Furniture Company Sales Budget For the Month Ending February 28
Product and Area	Unit Sales Volume	Unit Selling Price	Total Sales
King:
	Northern Domestic	__________	____________	_____________
	Southern Domestic	__________	_____________	______________
		________________	______________	_____________
	Total	___________		_____________
Prince:
	Northern Domestic	_________________	________________	_____________
	Southern Domestic	________________	_____________	_______________
	International	______________	______________	_______________
	Total	_____________		_______________
Total revenue from sales			______________

2. Prepare a production budget for February. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Royal Furniture Company Production Budget For the Month Ending February 28
	Units
	King	Prince
Expected units to be soldDesired inventory, February 28Total units availableEstimated inventory, February 1Total units to be produced	___________	____________
Expected units to be soldDesired inventory, February 28Total units availableEstimated inventory, February 1Total units to be produced	__________	_________
Expected units to be soldDesired inventory, February 28Total units availableEstimated inventory, February 1Total units to be produced	_____________	____________
Expected units to be soldDesired inventory, February 28Total units availableEstimated inventory, February 1Total units to be produced	___________	______________
Expected units to be soldDesired inventory, February 28Total units availableEstimated inventory, February 1Total units to be produced	___________	______________

3. Prepare a direct materials purchases budget for February. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Royal Furniture Company Direct Materials Purchases Budget For the Month Ending February 28
	Direct Materials
		Fabric (sq. yds.)		Wood (linear ft.)		Filler (cu. ft.)		Springs (units)	Total
Required units for production:
King		______________		__________		______		_______
Prince		________		___________		_____________		__________
Desired inventory, February 28		___________		_____________		_________		_________
Total		____________		_______		__________		____________
Estimated inventory, February 1		_____________		_____________		___________		__________
Total units to be purchased		_____________		_____________		_________		____________
Unit price		________		_________		_________		________
Total direct materials to be purchased		___________		___________		__________		__________	_____

4. direct labor cost budget for February.

Royal Furniture Company Direct Labor Cost Budget For the Month Ending February 28
		Framing Department		Cutting Department		Upholstery Department	Total
Hours required for production:
	King		____________		_______________		_____________
	Prince		_______________		_______________		_____________
	Total		______________		_______________		_____________
Hourly rate		______________		_______________		_______________
Total direct labor cost		_____________		_______________		______________	____

Check My Work