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

Question

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

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 March is summarized as follows:

a. Estimated sales for March by sales territory:

b. Estimated inventories at March 1:

c. Desired inventories at March 31:

d. Direct materials used in production:

e. Anticipated purchase price for direct materials:

f. Direct labor requirements:

Required:

1. Prepare a sales budget for March.

2. Prepare a production budget for March.

3. Prepare a direct materials purchases budget for March.

4. Prepare a direct labor cost budget for March.

Maine:   Backyard Chef 350 units at $800 per unit   Master Chef 200 units at $1,400 per unit Vermont:   Backyard Chef 400 units at $825 per unit   Master Chef 240 units at $1,500 per unit New Hampshire:   Backyard Chef 320 units at $850 per unit   Master Chef 200 units at $1,600 per unit

Explanation / Answer

. Gourmet Grill Company Direct Materials Purchases Budget For the Month Ending July 31, 2014 Grates Stainless Steel Burner Sub- Shelves Total (units) (lbs.) assemblies (units) (units) Required units for production: Backyard Chef 2760 22080 1840 3680 30360 Master Chef 2580 18060 1720 2150 24510 Plus desired inventory, July 31, 2014 340 1800 155 315 2610 Total 5680 41940 3715 6145 57480 Less estimated inventory, July 1, 2014 290 1500 170 340 2300 Total units to be purchased 5390 40440 3545 5805 55180 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, 2014 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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