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	fill in the blank 1	$fill in the blank 2	$fill in the blank 3
	Southern Domestic	fill in the blank 4	fill in the blank 5	fill in the blank 6
	International	fill in the blank 7	fill in the blank 8	fill in the blank 9
	Total	fill in the blank 10		fill in the blank 11
Prince:
	Northern Domestic	fill in the blank 12	$fill in the blank 13	$fill in the blank 14
	Southern Domestic	fill in the blank 15	fill in the blank 16	fill in the blank 17
	International	fill in the blank 18	fill in the blank 19	fill in the blank 20
	Total	fill in the blank 21		$fill in the blank 22
Total revenue from sales				$fill in the blank 23

2. Prepare a production budget for February.

Royal Furniture Company Production Budget For the Month Ending February 28
	Units
	King	Prince
Expected units to be sold	fill in the blank 24	fill in the blank 25
Plus desired inventory, February 28	fill in the blank 26	fill in the blank 27
Total units required	fill in the blank 28	fill in the blank 29
Less estimated inventory, February 1	fill in the blank 30	fill in the blank 31
Total units to be produced	fill in the blank 32	fill in the blank 33

3. Prepare a direct materials purchases budget for February. Round your unit price answers to two decimal places.

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		fill in the blank 34		fill in the blank 35		fill in the blank 36		fill in the blank 37
Prince		fill in the blank 38		fill in the blank 39		fill in the blank 40		fill in the blank 41
Plus desired inventory, February 28		fill in the blank 42		fill in the blank 43		fill in the blank 44		fill in the blank 45
Total units required		fill in the blank 46		fill in the blank 47		fill in the blank 48		fill in the blank 49
Less estimated inventory, February 1		fill in the blank 50		fill in the blank 51		fill in the blank 52		fill in the blank 53
Total units to be purchased		fill in the blank 54		fill in the blank 55		fill in the blank 56		fill in the blank 57
Unit price		$fill in the blank 58		$fill in the blank 59		$fill in the blank 60		$fill in the blank 61
Total direct materials to be purchased		$fill in the blank 62		$fill in the blank 63		$fill in the blank 64		$fill in the blank 65	$fill in the blank 66

4. Prepare a 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		fill in the blank 67		fill in the blank 68		fill in the blank 69
	Prince		fill in the blank 70		fill in the blank 71		fill in the blank 72
	Total hours required		fill in the blank 73		fill in the blank 74		fill in the blank 75
Hourly rate			$fill in the blank 76		$fill in the blank 77		$fill in the blank 78
Total direct labor cost			$fill in the blank 79		$fill in the blank 80		$fill in the blank 81	$fill in the blank 82

Forecast Sales Volume and Sales Budget

For 20Y6, Raphael Frame Company prepared the sales budget that follows.

At the end of December 20Y6, the following unit sales data were reported for the year:

	Unit Sales
	8" 10" Frame		12" 16" Frame
East	19,760		13,020
Central	4,998		4,410
West	4,462		3,570

Raphael Frame Company Sales Budget For the Year Ending December 31, 20Y6
Product and Area		Unit Sales Volume		Unit Selling Price		Total Sales
8" 10" Frame:
East		19,000		$29		$551,000
Central		4,900		29		142,100
West		4,600		29		133,400
Total		28,500				$826,500
12" 16" Frame:
East		12,400		$39		$483,600
Central		4,500		39		175,500
West		3,500		39		136,500
Total		20,400				$795,600
Total revenue from sales						$1,622,100

For the year ending December 31, 20Y7, unit sales are expected to follow the patterns established during the year ending December 31, 20Y6. The unit selling price for the 8" 10" frame is expected to increase to $30 and the unit selling price for the 12" 16" frame is expected to increase to $41, effective January 1, 20Y7.

Required:

Question Content Area

1. Compute the increase or decrease of actual unit sales for the year ended December 31, 20Y6, over budget. Use the minus sign to indicate a decrease in amount and percent. Round percents to the nearest whole percent.

		Unit Sales, Year Ended 20Y6				Increase (Decrease) Actual Over Budget
		Budget		Actual Sales		Amount	Percent
8" 10" Frame:
	East	fill in the blank 6bd230fa7fb2fc8_1		fill in the blank 6bd230fa7fb2fc8_2		fill in the blank 6bd230fa7fb2fc8_3	fill in the blank 6bd230fa7fb2fc8_4%
	Central	fill in the blank 6bd230fa7fb2fc8_5		fill in the blank 6bd230fa7fb2fc8_6		fill in the blank 6bd230fa7fb2fc8_7	fill in the blank 6bd230fa7fb2fc8_8%
	West	fill in the blank 6bd230fa7fb2fc8_9		fill in the blank 6bd230fa7fb2fc8_10		fill in the blank 6bd230fa7fb2fc8_11	fill in the blank 6bd230fa7fb2fc8_12%
12" 16" Frame:
	East	fill in the blank 6bd230fa7fb2fc8_13		fill in the blank 6bd230fa7fb2fc8_14		fill in the blank 6bd230fa7fb2fc8_15	fill in the blank 6bd230fa7fb2fc8_16%
	Central	fill in the blank 6bd230fa7fb2fc8_17		fill in the blank 6bd230fa7fb2fc8_18		fill in the blank 6bd230fa7fb2fc8_19	fill in the blank 6bd230fa7fb2fc8_20%
	West	fill in the blank 6bd230fa7fb2fc8_21		fill in the blank 6bd230fa7fb2fc8_22		fill in the blank 6bd230fa7fb2fc8_23	fill in the blank 6bd230fa7fb2fc8_24%

2. Assuming that the increase or decrease in actual sales to budget indicated in part (1) is to continue in 20Y7, compute the unit sales volume to be used for preparing the sales budget for the year ending December 31, 20Y7. Use the minus sign to indicate a decrease in percent. Round budgeted units to the nearest whole unit.

		20Y6 Actual Units		Percentage Increase (Decrease)	20Y7 Budgeted Units (rounded)
8" 10" Frame:
	East	fill in the blank 6bd230fa7fb2fc8_25		fill in the blank 6bd230fa7fb2fc8_26%	fill in the blank 6bd230fa7fb2fc8_27
	Central	fill in the blank 6bd230fa7fb2fc8_28		fill in the blank 6bd230fa7fb2fc8_29%	fill in the blank 6bd230fa7fb2fc8_30
	West	fill in the blank 6bd230fa7fb2fc8_31		fill in the blank 6bd230fa7fb2fc8_32%	fill in the blank 6bd230fa7fb2fc8_33
12" 16" Frame:
	East	fill in the blank 6bd230fa7fb2fc8_34		fill in the blank 6bd230fa7fb2fc8_35%	fill in the blank 6bd230fa7fb2fc8_36
	Central	fill in the blank 6bd230fa7fb2fc8_37		fill in the blank 6bd230fa7fb2fc8_38%	fill in the blank 6bd230fa7fb2fc8_39
	West	fill in the blank 6bd230fa7fb2fc8_40		fill in the blank 6bd230fa7fb2fc8_41%	fill in the blank 6bd230fa7fb2fc8_42

Question Content Area

3. Prepare a sales budget for the year ending December 31, 20Y7.

Raphael Frame Company Sales Budget For the Year Ending December 31, 20Y7

Product and Area	Unit Sales Volume	Unit Selling Price	Total Sales
8" 10" Frame:
East	fill in the blank f0b59300cfa804c_1	$fill in the blank f0b59300cfa804c_2	$fill in the blank f0b59300cfa804c_3
Central	fill in the blank f0b59300cfa804c_4	fill in the blank f0b59300cfa804c_5	fill in the blank f0b59300cfa804c_6
West	fill in the blank f0b59300cfa804c_7	fill in the blank f0b59300cfa804c_8	fill in the blank f0b59300cfa804c_9
Total	fill in the blank f0b59300cfa804c_10		$fill in the blank f0b59300cfa804c_11
12" 16" Frame:
East	fill in the blank f0b59300cfa804c_12	$fill in the blank f0b59300cfa804c_13	$fill in the blank f0b59300cfa804c_14
Central	fill in the blank f0b59300cfa804c_15	fill in the blank f0b59300cfa804c_16	fill in the blank f0b59300cfa804c_17
West	fill in the blank f0b59300cfa804c_18	fill in the blank f0b59300cfa804c_19	fill in the blank f0b59300cfa804c_20
Total	fill in the blank f0b59300cfa804c_21		$fill in the blank f0b59300cfa804c_22
Total revenue from sales			$fill in the blank f0b59300cfa804c_23