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ales, Production,Direct Materials Purchases, and Direct Labor Cost Budgets

The budget director ofGourmet Grill Company requests estimates of sales, production, andother operating data from the various administrative units everymonth. Selected information concerning sales and production forJuly is summarized as follows:

a. Estimated sales forJuly 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. Estimatedinventories at July 1:

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

c. Desired inventoriesat July 31:

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

d. Direct materialsused in production:

In manufacture of Backyard Chef:
Grates	3 units per unit of product
Stainless steel	24 lbs. per unit of product
Burnersubassemblies	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
Burnersubassemblies	4 units per unit of product
Shelves	5 units per unit of product

e. Anticipatedpurchase price for direct materials:

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

f. Direct laborrequirements:

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

Required:

1.Prepare a sales budget for July.

Gourmet GrillCompany 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 youmust enter subtracted or negative numbers use a minus sign.

Gourmet GrillCompany Production Budget For the Month Ending July 31
	Units
	Backyard Chef	Master Chef
Expected units to be sold
Desired inventory, July 31
Total unitsavailable
Estimated inventory, July 1
Total units to be produced

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

Gourmet GrillCompany 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 GrillCompany 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			$		$		$	$

Feedback

Remember to take intoaccount expected units to be sold, desired units in endinginventory and estimated units in beginning inventory whencalculating total units to be produced.

Once sales quantitiesare estimated, the expected sales revenue can be determined.

Remember to take intoaccount materials required for production, desired ending materialsinventory and estimated beginning materials inventory whencalculating direct materials to be purchased.

Learning Objective4.