Tofino Furniture is an elite desk manufacturer. It manufactures two products:

• Executive desks: 0.91 m × 1.5 m oak desks = 1.365 m2

• Director desks: 1.8 m × 1.2 m red oak desks = 2.16 m2

The budgeted direct cost inputs for each product in 2016 are as follows:

Executive LineDirector Line

Direct materials:

Oak top.........................1.5 square metres...........................-

Red oak top.....................................-...........2.3 square metres

Oak legs......................................4 legs............................-

Red oak legs....................................-........................4 legs

Direct manufacturing labour.............3 hours......................5 hours

Unit data pertaining to the direct materials for March 2016 are as follows:

Actual Beginning Direct Materials Inventory

(March 1, 2016)

Product

Executive LineDirector Line

Oak top.................................29.8 square metres.................................-

Red oak top................................................-...............13.9 square metres

Oak legs.............................................100 legs.................................-

Red oak legs...............................................-.............................40 legs

Target Ending Direct Materials Inventory

(March 31, 2016)

Product

Executive LineDirector Line

Oak top........17.9 square metres.............................-

Red oak top.....................-..........18.6 square metres

Oak legs.....................80 legs.............................-

Red oak legs.....................-........................44 legs

Unit cost data for direct cost inputs pertaining to February 2016 and March 2016 are:

February 2016March 2016

(Actual)(Budgeted)

Oak top (per square metre).......$21.60.......................$24.00

Red oak top (per square metre).....27.60........................30.00

Oak legs (per leg)....................13.20........................14.40

Red oak legs (per leg)...............20.40........................21.60

Manufacturing labour cost / hour..36.00........................36.00

Manufacturing overhead (both variable and fixed) is allocated to each desk based on budgeted direct manufacturing labour-hours per desk. The budgeted variable manufacturing overhead rate for March 2016 is $42 per direct manufacturing labour-hour. The budgeted fixed manufacturing overhead for March 2016 is $51,000. Both variable and fixed manufacturing overhead costs are allocated to each unit of finished goods. Data relating to finished goods inventory for March 2016 are:

Executive LineDirector Line

Beginning inventory........................20 units..........................5 units

Beginning inventory in dollars (cost).....$12,576..........................$5,820

Budgeted ending inventory................30 units........................15 units

Budgeted sales for March 2016 are 740 units of the Executive Line and 390 units of the Director Line. The budgeted selling prices per unit in March 2016 are $1,224 for an Executive Line desk and $1,920 for a Director Line desk.

Assume the following in your answer:

a. Work-in-process inventories are negligible and ignored.

b. Direct materials inventory and finished goods inventory are costed using the FIFO method.

c. Unit costs of direct materials purchased and finished goods are constant in March 2016.

Required

Prepare the following budgets for March 2016:

1. Revenue budget.

2. Production budget in units.

3. Direct materials usage budget and direct materials purchases budget.

4. Direct manufacturing labour budget.

5. Manufacturing overhead budget.

6. ending inventory budget.

7. Cost of goods sold budget and gross margin calculation.