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 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 Total revenue from sales 1,242,000
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 Expected units to be sold 910 440 Desired inventory, July 31 40 22 Total units available 950 462 Estimated inventory, July 1 -30 -32 Total units to be produced 920 430
3. Prepare a direct materials purchases 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

Gourmet Grill Company

1. Sales Budget For the Month Ending July 31

Product             Area Unit               Sales       Unit Selling                 Total

                                                      Volume         Price           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

Total revenue from sales                                                         $1,242,000

2. Gourmet Grill Company Production Budget For the Month Ending July 31 Units

Units                                Backyard Chef           Master Chef       Total

Expected units to be sold        910                          440               1,350

Desired inventory, July 31         40                            22                   62

Total units available                950                          462                1,412

Estimated inventory, July 1      -30                           -32                   62

Total units to be produced    920                          430               1,350

3. Gourmet Grill Company

Direct Labor Cost Budget

For the Month Ending July 31

                                                  Stamping        Forming       Assembly

                                Units        Department   Department  Department

Backyard Chef        920            460 hrs           552 hrs         920 hrs            Master Chef            430            258 hrs           344 hrs          645 hrs

Total Hours required

 for production:                          718 hrs           896 hrs      1,565 hrs

Total Hourly rate                        $17                  $15                $14                    

Total direct labor cost           $12,206         $13,440          $21,910

Explanation:

1) Data:

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.

b) Calculations:

                                                  Stamping        Forming       Assembly

                                Units        Department   Department  Department

Backyard Chef           1                  0.50 hr             0.60 hr       1.00 hr

Total hours required  920            460 hrs            552 hrs      920 hrs                               

Master Chef                1                0.60 hr             0.80 hr         1.50 hrs

Total hours required  430            258 hrs            344 hrs        645 hrs

Total Hours required

 for production:                             718 hrs            896 hrs     1,565 hrs

c) Gourmet Grill Company's Sales, Production, and Direct Labor Budgets for July detail the sales units under different product categories and areas.  They will guide the management of Gourmet Grill company to make relevant decisions with regard to inventories, production, and sales volume that must be achieved in order to realize the budgets and attin company's objectives.  They are very essential in planning, decision making, and control.  Based on these budgets, performances will be reviewed, analyzed, and accordingly rewarded.

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