The budget director of Gourmet Grill Company requests estimates of sales, produc

Question

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:

b. Estimated inventories at July 1:

c. Desired inventories at July 31:

d. Direct materials used in production:

e. Anticipated purchase price for direct materials:

f. Direct labor requirements:

Required:

1. Prepare a sales budget for July.

2. Prepare a production budget for July. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

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.

4. Prepare a direct labor cost budget for July.

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

Explanation / Answer

Ans. 1 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 217000 Vermont 240 750 180000 New Hampshire 360 750 270000 Total 910 667000 Master Chef: Maine 150 1200 180000 Vermont 110 1300 143000 New Hampshire 180 1400 252000 Total 440 575000 Total revenue from sales 1242000 Total Sales = Unit Sales Volume * Unit Selling Price Ans. 2 Gourmet Grill Company Production Budget For the month Ending July 31 Backyard Chef (units) Master Chef (units) Expected Units to be sold 910 440 Add: desired inventory, july 31,2015 40 22 Total 950 462 Less: estimated inventory, july 1, 2015 30 32 Total units to be produced 920 430 Expected units to be sold   (is calculated above in sales budget) Ans. 3 Gourmet Grill Company Direct Materials Purchases Budget For the month Ending July 31 Grates Stainless Burner Sub- Shelves Total (units) Steel (lbs.) assemlies (units) (units) Rrequired units for production: Backyard Chef 2760 22080 1840 3680 30360 Master Chef 2580 18060 1720 2150 14510 Add: desired inventory, july 31,2015 340 1800 155 315 2610 Total 5680 41940 3715 6145 57480 Less: estimated inventory, july 1, 2015 290 1500 170 340 2300 Total units to be purchased 5390 40440 3545 5805 55180 Unit price 15 6 110 10 Total direct materials to be purchased 80850 242640 389950 58050 771490 *Calculation of required units of production: Total units to be produced * particular units Grates ( 3 and 6) Stainless steel (24 and 42) Burner (2 and 4) Shelves (4 and 5) Backyard Chef (920 * 3) = 2760 (920 * 24) = 22080 (920 * 2) = 1840 (920 * 4) = 3680 Master Chef (430 * 6) = 2580 (430* 42) = 18060 (430 * 4) = 1720 (430 * 5) = 2150 *Total direct materials to be purchased   = Total units to be purchased * Unit price Ans. 4 Gourmet Grill Company Direct Labor Cost Budget For the month Ending July 31 Stamping Forming Assembly Total Department Department Department Hours required for production: Backyard Chef 460 552 920 1932 Master Chef 258 344 645 1247 Total 718 896 1565 3179 Hourly rate 17 15 14 Total direct labor cost 12206 13440 21910 47556 *Calculation of hours required for production: Stamping Forming Assembly Department Department Department Backyard Chef (920 * 0.50) = 460 (920 * 0.60) = 552 (920 * 1.00) = 920 Master Chef (430 * 0.60) = 258 (430 * 0.80) = 344 (430 * 1.50) = 645 *Total direct labor cost = Total hours required for production * hourly rate

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