Question

Sales, Production, Direct Materials Purchases, and Direct Labor Cost Budgets The budget director of Gourmet Grill...

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 subassemblies155 units
Shelves 315 units
Finished products:
Backyard Chef 40 units
Master Chef 22 units
d. Direct materials used in production:
In the 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 the 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. The 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

Gourmet Grill Company

1. 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 310 $700 $217,000

Vermont 240 $750 180,000

New Hampshire 360 $750 270,000

Total 910 $ 667,000

Master Chef:

Maine 150 $1,200 $ 180,000

Vermont 110 $1,300 143,000

New Hampshire 180 $1,400 252,000

Total 440 $575,000

2. Production Budget for July:

Gourmet Grill Company

Production Budget for the Month Ending July 31

Units

Backyard Chef Master Chef

Units sold 910 440

Ending inventory 40 22

less beginning inventory -30 -32

Units to be produced 920 430

3. Direct Materials Purchase Budget for July:

Gourmet Grill Company

Direct Materials Purchases Budget

For the Month Ending July 31

Grates (units) 5,390 units

Stainless Steel (lbs.) 40,440 lbs

Burner Sub- assemblies (units) 3,545 units

Shelves (units) 5,805 units

Total Required units for production:

Backyard Chef Master Chef Total for prodn.

Grates 2,760 units 2,580 units 5,340 units

Stainless steel 22,080 lbs 18,060 lbs 40,140 units

Burner subassemblies 1,840 units 1,720 units 3,560 units

Shelves 3,680 units 2,150 units 5,890 units

Total used July 31 Total July 1 Purchases

for prodn. Desired Estimated

Grates 5,340 340 5,680 290 5,390

Stainless steel 40,140 1,800 41,940 1,500 40,440

Burner subassemblies 3,560 155 3,7`15 170 3,545

Shelves 5,830 315 6,145 340 5,805

Grates Stainless Burner Shelves

Steel sub-assembly

Total units to be purchased 5,390 40,440 3,545 5,805

Unit price $15 $6 $110 $ 10

Total direct materials

to be purchased $80,850 $242,640 $389,950 $58,050

Total cost of direct materials to be purchased = $771,490

4. Direct labor cost budget:

Stamping Forming Assembly Total

Hours used:

Backyard Chef 460 552 920 1,932

Master Chef 258 344 645 1,247

Total hours used 718 896 1,565 3,179

Hourly rate $17 $15 $14

Total cost $12,206 $13,440 $21,910 $47,556

Step-by-step explanation:

1) Data for July:

a) Sales by territory

Maine Vermont New Hampshire

Backyard Chef (units) 310 240 360 910

Master Chef (units) 150 110 180 440

Backyard Chef (prices) $700 $750 $750

Master Chef (prices) $1,200 $1,300 $1,400

Sales Value:

Backyard Chef $217,000 $180,000 $270,000

Master Chef 180,000 143,000 252,000

Total sales $397,000 $323,000 $522,000

b. Estimated Inventories at July 1:

Direct materials: Beginning Purchases Desired Ending Used

Grates 290 units 5,390 340 units 5,340

Stainless steel 1,500 lbs. 40,440 1,800 lbs 40,140

Burner subassemblies 170 units 3,545 155 units 3,560

Shelves 340 units 5,805 315 units 5,830

c. Cost of Materials: Units unit costs Total costs

Grates 5,390 $15 $80,850

Stainless steel 40,440 $6 $242,640

Burner subassemblies 3,545 $110 $389,950

Shelves 5,805 $10 $58,050

Total $771,490

d. Labor Cost

Labor cost per hour Hours Required

Backyard Master

Stamping Department $17 0.50 hr 0.60 hr

Forming Department $15 0.60 hr 0.80 hr

Assembly Department $14 1.00 hr 1.50 hrs

Units produced 920 430

Stamping Department total hours 460 hrs 258 hrs

Forming Department 552 hrs 344 hrs

Assembly Department 920 hrs 645 hrs

Direct labor Cost :

Stamping department $7,820 $4,386 $12,206

Forming department $8,280 $5,160 13,440

Assembly department $12,880 $9,030 21,910

Total $28,980 $18,576 $47,556

or

Stamping department cost $8.50 $10.20

Forming department cost 9.00 12.00

Assembly department cost 14.00 21.00

Direct labor cost per unit $31.50 $43.20

Units produced 920 430

Total direct labor cost $28,980 $18,576 $47,556

e. Materials Usage

Backyard Chef Master Chef Total

Units produced 920 430 1,350

Materials used:

Grates 2,760 units 2,580 units 5,340 units

Stainless steel 22,080 lbs 18,060 lbs 40,140 lbs

Burner subassemblies 1,840 units 1,720 units 3,560 units

Shelves 3,680 units 2,150 units 5,830 units

f) Finished products: Beginning Production Desired Ending Units Sold

Backyard Chef 30 units 920 units 40 units 910 units

Master Chef 32 units 430 units 22 units 440 units