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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

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 2016 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, 2016
Product and Area Unit Sales Volume Unit Selling Price Total Sales
King:
Northern Domestic
Southern Domestic
International
Total
Prince:
Northern Domestic
Southern Domestic
International
Total
Total revenue from sales

2. Prepare a production budget for February.

Royal Furniture Company Production Budget For the Month Ending February 28, 2016
Units
King Prince
Expected units to be sold
Plus desired inventory, February 28, 2016
Total
Less estimated inventory, February 1, 2016
Total units to be produced

3. Prepare a direct materials purchases budget for February.

Royal Furniture Company Direct Materials Purchases Budget For the Month Ending February 28, 2016
Direct Materials
Fabric (sq. yds.) Wood (linear ft.) Filler (cu. ft.) Springs (units) Total
Required units for production:
King
Prince
Plus desired inventory, February 28, 2016
Total
Less estimated inventory, February 1, 2016
Total units to be purchased
Unit price
Total direct materials to be purchased

4. Prepare a direct labor cost budget for February.

Royal Furniture Company Direct Labor Cost Budget For the Month Ending February 28, 2016
Framing Department Cutting Department Upholstery Department Total
Hours required for production:
King
Prince
Total
Hourly rate
Total direct labor cost

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