The budget director of Gourmet Grill Company requests estimates of sales, produc

Question

The budget director of Gourmet Grill Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales and production for July 2016 is summarized as follows:

a. Estimated sales for July by sales territory:

b. Estimated inventories at July 1:

c. Desired inventories at July 31:

d. Direct materials used in production:

e. Anticipated purchase price for direct materials:

f. Direct labor requirements:

1. Prepare a sales budget for July.

2. Prepare a production budget for July.

3. Prepare a direct materials purchases budget for July.

4. Prepare a direct labor cost budget for July.

Maine: Backyard Chef 310 units at $700 per unit Master Chef 150 units at $1,200 per unit Vermont: Backyard Chef 240 units at $750 per unit Master Chef 110 units at $1,300 per unit New Hampshire: Backyard Chef 360 units at $750 per unit Master Chef 180 units at $1,400 per unit

Explanation / Answer

All Amounts in $ 1. Prepare a sales budget for July. Gourmet Grill Company Sales Budget For the Month Ending July 31, 2016 Product and Area Unit Sales Unit Selling Total Sales Volume Price Backyard Chef: Maine 310 700 217000 Vermont 240 750 180000 New Hampshire 360 750 270000 Total 910 733 667000 Master Chef: Maine 150 1200 180000 Vermont 110 1300 143000 New Hampshire 180 1400 252000 Total 440 1307 575000 Total revenue from sales 1242000 2. Prepare a production budget for July. Gourmet Grill Company Production Budget For the Month Ending July 31, 2016 Units Backyard Chef Master Chef Expected units to be sold 910 440 Plus desired inventory, July 31, 2016 40 22 Total 950 462 Less estimated inventory, July 1, 2016 30 32 Total units to be produced 920 430 3. Prepare a direct materials purchases budget for July. Gourmet Grill Company Direct Materials Purchases Budget For the Month Ending July 31, 2016 Grates Stainless Steel Burner Sub- Shelves Total (units) (lbs.) assemblies (units) (units) Required units for production of Backward Chef per finished unit produced 3 24 2 4 Required units for production of Master Chef per finished unit produced 6 42 4 5 Total Required Units Backyard Chef 2760 22080 1840 3680 30360 Master Chef 2580 18060 1720 2150 24510 Plus desired inventory, July 31, 2016 340 1800 155 315 Total 5680 41940 3715 6145 Less estimated inventory, July 1, 2016 290 1500 170 340 Total units to be purchased 5390 40440 3545 5805 Unit price 15 6 110 10 Total direct materials to be purchased 80850 242640 389950 58050 771490 4. Prepare a direct labor cost budget for July. Gourmet Grill Company Direct Labor Cost Budget For the Month Ending July 31, 2016 Stamping Forming Department Assembly Department Total Department Hours required for production: Backyard Chef 460 552 920 1932 Master Chef 258 344 645 1247 Total 718 896 1565 3179 Hourly rate 17 15 14 Total direct labor cost 12206 13440 21910 47556

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