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Royal Furniture Company: Sales, production, direct materials and direct labor 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 July 2006 is summarized as follows:

a. Estimated sales of King and Prince chairs for July by sales territory:

Northern Domestic:
King 5,700 units at $600 per unit
Prince 6,900 units at $450 per unit
Southern Domestic:
King 3,600 units at $620 per unit
Prince 4,000 units at $460 per unit
International:
King 1,100 units at $700 per unit
Prince 1,300 units at $500 per unit

b. Estimated inventories at July 1:

Direct materials Finished Products:
Fabric 4,300 sq. yds. King 840 units
Wood 6,300 lineal ft. Prince 280 units
Filler 2,500 cu. ft.
Springs 7,000 units

c. Desired Inventories at July 31:

Direct Materials: Finished Product:
Fabric 4,500 sq. yds. King 700 units
Wood 5,700 lineal ft. Prince 300 units
Filler 2,700 cu. ft.
Springs 7,000 units

d. Direct materials used in production:

In manufacture of King: In manufacture of Prince:
Fabric 4 sq yds. per unit of product Fabric 3.2 sq. yds. per unit of product
Wood 30 lineal ft. per unit of product Wood 20 lineal ft. per unit of product
Filler 3.5 cu. ft. per unit of product Filler 3.0 cu. ft per unit of product
Springs 12 units 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 $4.50 per cubic foot
Wood 6.00 per lineal foot Springs 2.50 per unit

f. Direct Labor requirements:

King
Framing Dept. 2.0 hours at $13 per hour
Cutting Dept .5 hours at $10 per hour
Upholstery Dept 2.5 hours at $12 per hour
Prince
Framing Dept 1.5 hours at $13 per hour
Cutting Dept 0.4 hour at $10 per hour
Upholstery Dept 1.8 hours at $12 per hour

Instructions
1. Prepare a sales budget for July
2. Prepare a production budget for July
3. Prepare a direct materials purchase budget for July
4. Prepare a direct labor cost budget for July.

Solution Preview

Please see the attached file.

1 Sales Budget for the month of July 2006
2 Production Budget for ...

Solution Summary

Please see the attached file. 1 Sales Budget for the month of July 2006;2 Production Budget for the month of July 2006 (In units);
3 A-Direct Material Usage Budget for July 2006-King product;3 B-Direct Material Usuage Budget for July 2006- Prince Product;
3 C-Direct material purchase cost Budget for the month of July 2006;4 Direct Manufacturing Labour hours & Labour cost budget for July 2006.

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