Your friend has come to you and asked you to help him create 4 Budgets and calculate some Variances. Use the information below to answer the questions below:

Projected Sales Dollars for each product are as follows:

Sales Price Per Chair $17.00

Sales Price Per Table $55.00

Projected Sales Amounts for each product are as follows:

Projected Chairs Sales This Period 102,000

Projected Tables Sales This Period 82,000

Estimated and Desired Inventory amounts for each level of inventory for each product as follows:

Estimated Beginning square feet wood inventory	10,000
Estimated Beginning square feet fabric inventory	14,000
Estimated Beginning square feet foam inventory	11,000
Estimated beginning finished goods chair inventory	5,000
Estimated beginning finished goods tables inventory	6,000
Desired ending square feet wood inventory	12,000
Desired ending square feet fabric inventory	17,000
Desired ending square feet foam inventory	15,000
Desired ending finished goods chairs inventory	7,000
Desired ending finished goods tables inventory	4,000

Standard Dollar/Rate and Quantity/Time amounts for each material and labor are as follows:

	Per Chair	Per Table
Standard square feet of wood	27	127
Standard square feet of fabric	9	7
Standard Square feet of foam	7	5

	Wood	Fabric	Foam
Standard purchase price per square foot	$0.23	$0.52	$0.13

	Chair	Table
Standard minutes to produce each product	10	25
Standard worker hourly wage	$17.00	$22.00

Actual Dollar and Quantity amounts for Wood and Actual Rate and Time amounts to produce tables

are as follows:

Actual wood square feet needed to produce chairs	2,805,000
Actual price per square foot of wood	$0.24

Actual hours needed to produce tables	34,500
Actual hourly wages paid to produce tables	$21.00

Using what you read in the Information section, please create the following Budgets and calculate the

following Variances:

1) Sales Budget

2) Production Budget

3) Direct Materials Purchases Budget

4) Direct Labor Cost Budget

5) Explain why Budgeting is important and why the Operating Budgets need to be created in a particular order:

6) Direct Labor Rate & Time Variances

7) Direct Materials Price & Quantity Variances

8) Explain how to read your Variances and what your calculations tell you about Actual versus Planned Production: