Question

Question Two (40 Marks): School Days Furniture, Inc., manufactures a variety of desks, chairs, tables, and shelf units which are sold to public school systems throughout the mid-west. The controller of the company's Desk Division is currently preparing a budget for the third quarter of the year. The following sales forecast has been made by the division's sales manager. July 10,000 desk-and-chair sets August 12,000 desk-and-chair sets September 15,000 desk-and-chair sets Each desk-and-chair set requires 10 board feet of pine planks and 1.5 hours of direct labor. Each set sells for $40. Pine planks cost $.60 per board foot, and the division ends each month with enough wood to cover 10 percent of the next month's production requirements. The division incurs a cost of $21.00 per hour for direct-labor wages and fringe benefits. The division ends each month with enough finished-goods inventory to cover 20 percent of the next month's sales. Required: Complete the following budget schedules: A Sales budget (10 points) July August September Sales (in sets) 10,000 Sales price per set... Х $40 Sales revenue $400.000
please make sure the answer is correct 100%

Answer 1

Requirement A:

Sales Budget
	July	August	September
Sales ( in Sets)	10,000	12,000	15,000
Sales price per set	$                 40	$                 40	$                 40
Sales revenue	$       400,000	$       480,000	$       600,000

Requirement B:

Production Budget
	July	August	September
Sales	10,000	12,000	15,000
Add: Desired ending inventory	2,400	3,000	3,000
Total requirements	12,400	15,000	18,000
Less: projected beginning inventory	2,000	2,400	3,000
Planned production	10,400	12,600	15,000

Note: Desired ending inventory of august = 15000*20% = 3000

Requirement C:

Raw materials purchases
	July	August	September
Planned production (sets)	10,400	12,600	15,000
Raw material required per set (Board feet)	10	10	10
Raw material required for production(board feet)	104,000	126,000	150,000
Add: Desired ending inventory RM (board feet)	12,600	15,000	16,000
Total requirements	116,600	141,000	166,000
Less: projected beginning inventory of RM (board feet)	10,400	12,600	15,000
Planned purchases of raw materials (board feet)	106,200	128,400	151,000
Cost per board foot	$              0.60	$              0.60	$              0.60
Planned purchases of raw materials (dollars)	$          63,720	$          77,040	$          90,600
Note: Desired ending inventory RM (board feet) of august = 150000*10% = 15000