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New Production Equipment Purchase
The budget director of the Freeman Furniture Company requests estimates of sales, production, and other operating data from the various administrative units every month.
Selected information concerning sales and production data for February 20X9 is presented below.
Midwest Region
Southern Region
International Region
Direct Materials
Finished Products
King105 units
Queens35 units
Fabric430 square yards
Wood680 linear ft
Filler350 cubic ft
Springs 660 units
Finished ProductsKing 95 units
Queens 40 units
In Manufacture of Queens
Direct Labor RequirementsKing
Queens
Framing Department1.0 hours at $16 per hourCutting Department0.4 hours at $19 per hourUpholstery Department0.6 hours at $20 per hour
Question 1: The production supervisor wants to purchase new production equipment for April 20X9. The goal is to replace the labor-intensive production system. Please memo to the executive team explaining why new production equipment could affect the production and purchases budgets.
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