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Sales, Production, Direct Materials Purchases, and Direct Labor Cost Budgets The budget director of Gourmet Grill Company requests estimates of sales, production, and other operating

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

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 2016 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 $750 per unit
Master Chef 180 units at $1,400 per unit

b. Estimated inventories at July 1:

Direct materials:
Grates 290 units
Stainless steel 1,500 lbs.
Burner subassemblies 170 units
Shelves 340 units
Finished products:
Backyard Chef 30 units
Master Chef 32 units

c. Desired inventories at July 31:

Direct materials:
Grates 340 units
Stainless steel 1,800 lbs.
Burner subassemblies 155 units
Shelves 315 units
Finished products:
Backyard Chef 40 units
Master Chef 22 units

d. Direct materials used in production:

In manufacture of Backyard Chef:
Grates 3 units per unit of product
Stainless steel 24 lbs. per unit of product
Burner subassemblies 2 units per unit of product
Shelves 4 units per unit of product
In manufacture of Master Chef:
Grates 6 units per unit of product
Stainless steel 42 lbs. per unit of product
Burner subassemblies 4 units per unit of product
Shelves 5 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. Direct labor requirements:

Backyard Chef:
Stamping Department 0.50 hr. at $17 per hr.
Forming Department 0.60 hr. at $15 per hr.
Assembly Department 1.0 hr. at $14 per hr.
Master Chef:
Stamping Department 0.60 hr. at $17 per hr.
Forming Department 0.80 hr. at $15 per hr.
Assembly Department 1.50 hrs. at $14 per hr.

Required:

1. Prepare a sales budget for July.

Gourmet Grill Company Sales Budget For the Month Ending July 31, 2016
Product and Area Unit Sales Volume Unit Selling Price Total Sales
Backyard Chef:
Maine
Vermont
New Hampshire
Total
Master Chef:
Maine
Vermont
New Hampshire
Total
Total revenue from sales

2. Prepare a production budget for July.

Gourmet Grill Company Production Budget For the Month Ending July 31, 2016
Units
Backyard Chef Master Chef
Expected units to be sold
Plus desired inventory, July 31, 2016
Total
Less estimated inventory, July 1, 2016
Total units to be produced

3. Prepare a direct materials purchases budget for July.

Gourmet Grill Company Direct Materials Purchases Budget For the Month Ending July 31, 2016
Grates (units) Stainless Steel (lbs.) Burner Sub- assemblies (units) Shelves (units) Total
Required units for production:
Backyard Chef
Master Chef
Plus desired inventory, July 31, 2016
Total
Less estimated inventory, July 1, 2016
Total units to be purchased
Unit price
Total direct materials to be purchased

4. Prepare a direct labor cost budget for July.

Gourmet Grill Company Direct Labor Cost Budget For the Month Ending July 31, 2016
Stamping Department Forming Department Assembly Department Total
Hours required for production:
Backyard Chef
Master Chef
Total
Hourly rate
Total direct labor cost

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