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 July is summarized as follows:

a. Estimated sales for July by sales territory:

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

b. Estimated inventories at July 1:

Direct materials:
Grates	290 units
Stainless steel	1,500 lbs.
Burner subassemblies	170 units
Shelves	340 units
Finished products:
Backyard Chef	30 units
Master Chef	32 units

c. Desired inventories at July 31:

Direct materials:
Grates	340 units
Stainless steel	1,800 lbs.
Burner subassemblies	155 units
Shelves	315 units
Finished products:
Backyard Chef	40 units
Master Chef	22 units

d. Direct materials used in production:

In manufacture of Backyard Chef:
Grates	3 units per unit of product
Stainless steel	24 lbs. per unit of product
Burner subassemblies	2 units per unit of product
Shelves	4 units per unit of product
In manufacture of Master Chef:
Grates	6 units per unit of product
Stainless steel	42 lbs. per unit of product
Burner subassemblies	4 units per unit of product
Shelves	5 units per unit of product

e. Anticipated purchase price for direct materials:

Grates	$15 per unit
Stainless steel	$6 per lb.
Burner subassemblies	$110 per unit
Shelves	$10 per unit

f. Direct labor requirements:

Backyard Chef:
Stamping Department	0.50 hr. at $17 per hr.
Forming Department	0.60 hr. at $15 per hr.
Assembly Department	1.00 hr. at $14 per hr.
Master Chef:
Stamping Department	0.60 hr. at $17 per hr.
Forming Department	0.80 hr. at $15 per hr.
Assembly Department	1.50 hrs. at $14 per hr.

Required:

1. Prepare a sales budget for July.

Gourmet Grill Company Sales Budget For the Month Ending July 31
Product and Area		Unit Sales Volume	Unit Selling Price	Total Sales
Backyard Chef:
	Maine		$	$
	Vermont
	New Hampshire
	Total			$
Master Chef:
	Maine		$	$
	Vermont
	New Hampshire
	Total			$
Total revenue from sales				$

2. Prepare a production budget for July. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Gourmet Grill Company Production Budget For the Month Ending July 31
	Units
	Backyard Chef	Master Chef

3. Prepare a direct materials purchases budget for July. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Gourmet Grill Company Direct Materials Purchases Budget For the Month Ending July 31
	Grates (units)	Stainless Steel (lbs.)	Burner Sub- assemblies (units)	Shelves (units)	Total
Required units for production:
Backyard Chef
Master Chef
Desired inventory, July 31
Total
Estimated inventory, July 1
Total units to be purchased
Unit price	$	$	$	$
Total direct materials to be purchased	$	$	$	$	$

4. Prepare a direct labor cost budget for July.

Gourmet Grill Company Direct Labor Cost Budget For the Month Ending July 31
			Stamping Department		Forming Department		Assembly Department	Total
Hours required for production:
	Backyard Chef
	Master Chef
	Total
Hourly rate			$		$		$
Total direct labor cost			$		$		$	$

Answer 1

Unit Sales Selling Price Sales 700 310 240 360 217000 180000 270000 667000 Sales Budget Sno Particulars 1 Backyard Chef 2 Maine 3 Vermont 4|New Hamsphire 5 Total(2+3+4) 6 Master Chef 7 Maine 8 Vermont 9 New Hamsphire 10 Total(7+8+9) 11 Total Revenue from sales (2+3+4+7+8+9) 150 110 180 1200 1300 1400 180000 143000 252000 575000 1909000

Backyard Chef Sales Master Chef 310 240 Production Budget Sno Particulars 1 Marine 2 vermont 3 New Hamsphire 4 Total(1+2+3) 5 Closing Stock 6 Total Requirements(4+5) 7 Opening Stock 8 Required Production(6-7) 462 430

Direct Materila purchase Budget Burner Sub- Stainless Steel(lbs) Assemblies Grates(units) Shelves (Units) Total 24 1840 Particulars 1 Direct Materials for Backyard chef 2 Direct Materials for Master chef Required Units for production 3 Backyard Chef(920*(1)) 4 Master chef(430*(2)) 5 Closing Stock 6 Opening stock 7 Total Units to be purchased(3+4+5-6) 8 Unit Price 9 Direct Material Purchased(7*8) 2760 2580 340 290 5390 15 80850 22080 18060 1800 1500 40440 1720 155 170 3545 110 389950 3680 2150 315 340 5805 242640 58050 771490

Stamping Departmer Forming Departmen Assembly Total 0.5 0.6 0.6 0.8 1.5 - Direct Labour Cost Budget for July Sno Particulars 1 Direct Labour Hrs for Back Yard chef 2 Direct Labour Hrs for Master chef Hours required for Production 3 Backyard Chef(920*(1)) 4 Master chef(430*(2)) 5 Hourly rate 6 Total Direct Labour Cost 460 258 552 344 920 645 14 21910 15 12206 13440 47556