The budget director of Peaky Blinders Furniture Company requests estimates of sales, production, and other operating data every month. Selected information concerning sales and production for March is summarized as follows: Estimated sales of Thomas and Polly chairs for March by sales territory: Birmingham: Product Name Data Thomas 8,000 units at $900 per unit Polly 7,000 units at $700 per unit London: Product Name Data Thomas 6,000 units at $800 per unit Polly 5,500 units at $650 per unit International: Product Name Data Thomas 6,000 units at $800 per unit Polly 5,500 units at $650 per unit Estimated inventories at March 1: Direct materials: Department Data Fabric 2,750 sq. yds. Wood 6,850 lineal ft. Filler 1,900 cu. ft. Springs 3,500 units Finished products: Product Name Units Completed Thomas 750 units Polly 150 units Desired inventories at March 31: Direct materials: Department Data Fabric 4,500 sq. yds. Wood 10,000 lineal ft. Filler 2,500 cu. ft. Springs 7,500 units Finished products: Product Name Units Completed Thomas 1,000 units Polly 450 units Direct materials used in production: In manufacture of Thomas: Department Data Fabric 2.0 sq. yds. per unit of product Wood 8 lineal ft. per unit of product Filler 3.8 cu. ft. per unit of product Springs 7 units per unit of product In manufacture of Polly: Department Data Fabric 2.5 sq. yds. per unit of product Wood 6 lineal ft. per unit of product Filler 3.2 cu. ft. per unit of product Springs 5 units per unit of product Anticipated purchase price for direct materials: Department Data Fabric $10.00 per sq. yd. Wood 5.00 per lineal ft. Filler $1.50 per cu. ft. Springs 3.00 per unit Direct labor requirements: Thomas: Department Data Framing Department 2.5 hrs. at $30 per hr. Cutting Department 1.0 hr. at $24 per hr. Upholstery Department 3.0 hrs. at $32 per hr. Polly: Department Data Framing Department 1.5 hrs. at $30 per hr. Cutting Department 0.5 hr. at $24 per hr. Upholstery Department 2.0 hrs. at $32 per hr. Instructions: Prepare a sales budget for March. Prepare a production budget for March. Prepare a direct materials purchases budget for March. Prepare a direct labor cost budget for March.
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.
The budget director of Peaky Blinders Furniture Company requests estimates of sales, production, and other operating data every month. Selected information concerning sales and production for March is summarized as follows:
- Estimated sales of Thomas and Polly chairs for March by sales territory:
Birmingham:
Product Name Data
Thomas 8,000 units at $900 per unit
Polly 7,000 units at $700 per unit
London:
Product Name Data
Thomas 6,000 units at $800 per unit
Polly 5,500 units at $650 per unit
International:
Product Name Data
Thomas 6,000 units at $800 per unit
Polly 5,500 units at $650 per unit
- Estimated inventories at March 1:
Direct materials:
Department Data
Fabric 2,750 sq. yds.
Wood 6,850 lineal ft.
Filler 1,900 cu. ft.
Springs 3,500 units
Finished products:
Product Name Units Completed
Thomas 750 units
Polly 150 units
- Desired inventories at March 31:
Direct materials:
Department Data
Fabric 4,500 sq. yds.
Wood 10,000 lineal ft.
Filler 2,500 cu. ft.
Springs 7,500 units
Finished products:
Product Name Units Completed
Thomas 1,000 units
Polly 450 units
- Direct materials used in production:
In manufacture of Thomas:
Department Data
Fabric 2.0 sq. yds. per unit of product
Wood 8 lineal ft. per unit of product
Filler 3.8 cu. ft. per unit of product
Springs 7 units per unit of product
In manufacture of Polly:
Department Data
Fabric 2.5 sq. yds. per unit of product
Wood 6 lineal ft. per unit of product
Filler 3.2 cu. ft. per unit of product
Springs 5 units per unit of product
- Anticipated purchase price for direct materials:
Department Data
Fabric $10.00 per sq. yd.
Wood 5.00 per lineal ft.
Filler $1.50 per cu. ft.
Springs 3.00 per unit
- Direct labor requirements:
Thomas:
Department Data
Framing Department 2.5 hrs. at $30 per hr.
Cutting Department 1.0 hr. at $24 per hr.
Upholstery Department 3.0 hrs. at $32 per hr.
Polly:
Department Data
Framing Department 1.5 hrs. at $30 per hr.
Cutting Department 0.5 hr. at $24 per hr.
Upholstery Department 2.0 hrs. at $32 per hr.
Instructions:
- Prepare a sales budget for March.
- Prepare a production budget for March.
- Prepare a direct materials purchases budget for March.
- Prepare a direct labor cost budget for March.
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