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

The budget director of Royal British 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 March is summarized as follows:

a. Estimated sales of William and Kate chairs for March by sales territory:

Eastern Domestic:
	William	9,000 units at $800 per unit
	Kate	6,000 units at $650 per unit
Western Domestic:
	William	6,000 units at $700 per unit
	Kate	5,500 units at $550 per unit
International:
	William	3,500 units at $600 per unit
	Kate	1,000 units at $350 per unit

b. Estimated inventories at March 1:

Direct materials:				Finished products:
Fabric		5,500	sq. yds.	William	1,500	units
Wood		13,700	lineal ft.	Kate	300	units
Filler		3,800	cu. ft.
Springs		3,500	units

c. Desired inventories at March 31:

Direct materials:				Finished products:
Fabric		9,000	sq. yds.	William	2,000	units
Wood		20,000	lineal ft.	Kate	900	units
Filler		5,000	cu. ft.
Springs		7,500	units

d. Direct materials used in production:

In manufacture of William:
Fabric		4.0	sq. yds. per unit of product
Wood		16	lineal ft. per unit of product
Filler		3.8	cu. ft. per unit of product
Springs		14	units per unit of product
In manufacture of Kate:
Fabric		2.5	sq. yds. per unit of product
Wood		12	lineal ft. per unit of product
Filler		3.2	cu. ft. per unit of product
Springs		10	units per unit of product

e. Anticipated purchase price for direct materials:

Fabric		$9.00	per sq. yd.		Filler		$1.50	per cu. ft.
Wood		5.00	per lineal ft.		Springs		2.00	per unit

f. Direct labor requirements:

William:
Framing Department		2.5 hrs. at $15 per hr.
Cutting Department		1.0 hr. at $12 per hr.
Upholstery Department		3.0 hrs. at $16 per hr.
Kate:
Framing Department		1.5 hrs. at $15 per hr.
Cutting Department		0.5 hr. at $12 per hr.
Upholstery Department		2.0 hrs. at $16 per hr.

Required:

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1. Prepare a sales budget for March.

Product and Area	Unit Sales Volume	Unit Selling Price	Total Sales
William:
Eastern Domestic		$	$
Western Domestic
International
Total			$
Kate:
Eastern Domestic		$	$
Western Domestic
International
Total			$
Total revenue from sales			$

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2. Prepare a production budget for March.

	William Units	Kate Units
Expected units to be sold
Less desired inventory, March 1Less desired inventory, March 31Plus desired inventory, March 1Plus desired inventory, March 31	- Select -	- Select -
Total
Less estimated inventory, March 1Less estimated inventory, March 31Plus estimated inventory, March 1Plus estimated inventory, March 31	- Select -	- Select -
Total units to be produced

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3. Prepare a direct materials purchases budget for March.

	Fabric (sq. yds.)	Wood (lineal ft.)	Direct Materials Filler (cu. ft.)	Springs (units)	Total
Required units for production:
William
Kate
Less desired inventory, March 1Less desired inventory, March 31Plus desired inventory, March 1Plus desired inventory, March 31	- Select -	- Select -	- Select -	- Select -
Total
Less estimated inventory, March 1Less estimated inventory, March 31Plus estimated inventory, March 1Plus estimated inventory, March 31	- Select -	- Select -	- Select -	- Select -
Total units to be purchased
Unit price	$	$	$	$
Total direct materials to be purchased	$	$	$	$	$

Question Content Area

4. Prepare a direct labor cost budget for March.

	Framing Department	Cutting Department	Upholstery Department	Total
Hours required for production:
William
Kate
Total
Hourly rate	$	$	$
Total direct labor cost	$	$	$	$