Sales, Production, Direct Materials Purchases, and Direct Labor Cost BudgetsThe budget director of Royal Furniture Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selectedinformation concerning sales and production for February is summarized as follows:a. Estimated sales of King and Prince chairs for February by sales territory:Northern Domestic:King 610 units at $780 per unitPrince 750 units at $550 per unitSouthern Domestic:King 340 units at $780 per unitPrince 440 units at $550 per unitInternational:King 360 units at $850 per unitPrince 290 units at $600 per unitb. Estimated inventories at February 1:Direct materials:Fabric 420 sq. yds.Wood 580 linear ft.Filler 250 cu. ft.Springs 660 unitsFinished products:King 90 unitsPrince 25 unitsc. Desired inventories at February 28:Direct materials:Fabric 390 sq. yds.Wood 650 linear ft.Filler 300 cu. ft.Springs 540 unitsFinished products:King 80 unitsPrince 35 unitsd. Direct materials used in production:In manufacture of King:Fabric 6.0 sq. yds. per unit of productWood 38 linear ft. per unit of productFiller 4.2 cu. ft. per unit of productSprings 16 units per unit of productIn manufacture of Prince:Fabric 4.0 sq. yds. per unit of productWood 26 linear ft. per unit of productFiller 3.4 cu. ft. per unit of productSprings 12 units per unit of producte. Anticipated purchase price for direct materials:Fabric $12.00 per sq. yd.Wood 7.00 per linear ft.Filler $3.00 per cu. ft.Springs 4.50 per unitf. Direct labor requirements:King:Framing Department 1.2 hrs. at $12 per hr.Cutting Department 0.5 hr. at $14 per hr.Upholstery Department 0.8 hr. at $15 per hr.Prince:Framing Department 1.0 hr. at $12 per hr.Cutting Department 0.4 hr. at $14 per hr.Upholstery Department 0.6 hr. at $15 per hr.Required:1. Prepare a sales budget for February.Royal Furniture CompanySales BudgetFor the Month Ending February 28Product and Area Total SalesUnit SalesVolumeUnit SellingPriceKing:Northern DomesticSouthern DomesticInternationalTotalPrince:Northern DomesticSouthern DomesticInternationalTotalTotal revenue from sales2. Prepare a production budget for February. For those boxes in which you must enter subtracted or negative numbers use a minus sign.Royal Furniture CompanyProduction BudgetFor the Month Ending February 28UnitsKing Prince3. Prepare a direct materials purchases budget for February. For those boxes in which you must enter subtracted or negative numbers use a minus sign.Royal Furniture CompanyDirect Materials Purchases BudgetFor the Month Ending February 28Direct MaterialsFabric(sq. yds.)Wood(linear ft.)Filler(cu. ft.)Springs(units)TotalRequiredunits forproduction:KingPrinceDesiredinventory,February28TotalEstimatedinventory,February 1Total unitsto bepurchasedUnit priceTotal directmaterialsto bepurchased4. Prepare a direct labor cost budget for February.Royal Furniture CompanyDirect Labor Cost BudgetFor the Month Ending February 28Total
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 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 February is summarized as follows:
a. Estimated sales of King and Prince chairs for February by sales territory:
Northern Domestic:
King 610 units at $780 per unit
Prince 750 units at $550 per unit
Southern Domestic:
King 340 units at $780 per unit
Prince 440 units at $550 per unit
International:
King 360 units at $850 per unit
Prince 290 units at $600 per unit
b. Estimated inventories at February 1:
Direct materials:
Fabric 420 sq. yds.
Wood 580 linear ft.
Filler 250 cu. ft.
Springs 660 units
Finished products:
King 90 units
Prince 25 units
c. Desired inventories at February 28:
Direct materials:
Fabric 390 sq. yds.
Wood 650 linear ft.
Filler 300 cu. ft.
Springs 540 units
Finished products:
King 80 units
Prince 35 units
d. Direct materials used in production:
In manufacture of King:
Fabric 6.0 sq. yds. per unit of product
Wood 38 linear ft. per unit of product
Filler 4.2 cu. ft. per unit of product
Springs 16 units per unit of product
In manufacture of Prince:
Fabric 4.0 sq. yds. per unit of product
Wood 26 linear ft. per unit of product
Filler 3.4 cu. ft. per unit of product
Springs 12 units per unit of product
e. Anticipated purchase price for direct materials:
Fabric $12.00 per sq. yd.
Wood 7.00 per linear ft.
Filler $3.00 per cu. ft.
Springs 4.50 per unit
f. Direct labor requirements:
King:
Framing Department 1.2 hrs. at $12 per hr.
Cutting Department 0.5 hr. at $14 per hr.
Upholstery Department 0.8 hr. at $15 per hr.
Prince:
Framing Department 1.0 hr. at $12 per hr.
Cutting Department 0.4 hr. at $14 per hr.
Upholstery Department 0.6 hr. at $15 per hr.
Required:
1. Prepare a sales budget for February.
Royal Furniture Company
Sales Budget
For the Month Ending February 28
Product and Area Total Sales
Unit Sales
Volume
Unit Selling
Price
King:
Northern Domestic
Southern Domestic
International
Total
Prince:
Northern Domestic
Southern Domestic
International
Total
Total revenue from sales
2. Prepare a production budget for February. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
Royal Furniture Company
Production Budget
For the Month Ending February 28
Units
King Prince
3. Prepare a direct materials purchases budget for February. For those boxes in which you must enter subtracted or negative numbers use a minus sign.
Royal Furniture Company
Direct Materials Purchases Budget
For the Month Ending February 28
Direct Materials
Fabric
(sq. yds.)
Wood
(linear ft.)
Filler
(cu. ft.)
Springs
(units)
Total
Required
units for
production:
King
Prince
Desired
inventory,
February
28
Total
Estimated
inventory,
February 1
Total units
to be
purchased
Unit price
Total direct
materials
to be
purchased
4. Prepare a direct labor cost budget for February.
Royal Furniture Company
Direct Labor Cost Budget
For the Month Ending February 28
Total
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