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    Sales, production, direct materials, direct labor budgets

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    The budget director of Royal Furniture Company requests estimates of sales, production and other operating data from various administrative units every month. Selected information concerning sales and production for July 2006 is summarized as follows: (See attachment)
    a) Estimated sales of King and Prince chairs 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 budget for July.
    4) Prepare a direct labor cost budget for July.

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    Solution Preview

    see attached file

    Sales Budget:

    Total Northern Domestic Southern Domestic International
    Projected Sales (units) 10,400 5,700 3,600 1,100
    Unit Price $600 $620 $700
    Total projected Sales ($) $6,422,000 $3,420,000 $2,232,000 $770,000

    Total Northern Domestic Southern Domestic International
    Projected Sales (units) 12,200 6,900 4,000 1,300
    Unit Price $450 $460 $500
    Total projected Sales ($) $5,595,000 $3,105,000 $1,840,000 $650,000

    Total Projected Sales
    (King and Prince) $12,017,000

    2) Production Budget:

    King Prince
    Projected Sales (Units) 10,400 12,200
    Projected Ending inventory 700 300
    Total projected need 11,100 12,500
    Less Beginning inventory 840 280
    Projected Production 10,260 12,220

    3) Direct material purchase budget:

    1) Fabric (in sq yds)
    Total King Prince
    Projected Production ...

    Solution Summary

    Prepare a sales budget, a production budget, a direct materials budget and a direct labor cost budget.