1. Prepare a sales budget for July.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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 | $ |
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