Reference no: EM132471997

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.

Estimated Sales of King and Queens Chairs for February by Sales Territory

Midwest Region

1. King 680 units at $820 per unit Queens 850 units at $540 per unit

Southern Region

1. King 390 units at $820 per unit Queens 480 units at 4540 per unit

International Region

1. King 420 units at $870 per unit Queens 330 units at $600 per unit
2. Estimated Inventories at February 1, 20X9

Direct Materials

1. Fabric 470 square yards Wood 620 linear ft Filler 300 cubic ft Springs 710 units

Finished Products

1. King 105 units Queens 35 units
2. Desired Inventories at February 28, 20X9

Direct Materials

1. Fabric 430 square yards Wood 680 linear ft Filler 350 cubic ft Springs 660 units

Finished Products

1. King 95 units Queens 40 units
2. Direct Materials Used in Production

In Manufacture of King

1. Fabric 6.5 square yards per unit of product Wood 42 linear ft per unit of product Filler 4.6 cubic ft per unit of product Springs 18 units per unit of product

In Manufacture of Queens

1. Fabric 4.5 square yards per unit of product Wood 30 linear ft per unit of product Filler 3.8 cubic ft per unit of product Springs 14 units per unit of product
2. Anticipated Purchase Price for Direct Materials for Both Products
3. Fabric $16.00 per square year Wood $9.50 per linear ft Filler $4.50 per cubic Springs

Direct Labor Requirements

King

1. Framing Department 1.2 hours at $16 per hour Cutting Department 0.5 hours at $19 per hour Upholstery Department 0.8 hours at $20 per hour

Queens

1. Framing Department 1.0 hours at $16 per hour Cutting Department 0.4 hours at $19 per hour Upholstery Department 0.6 hours at $20 per hour

Question 1: Prepare a sales budget for February 20X9.

Question 2: Prepare a production budget for February 20X9.

Question 3: Prepare a direct materials purchases budget for February 20X9.

Question 4: Prepare a direct labor budget for February 20X9.

Question 5: The production supervisor wants to purchase new production equipment for April 20X9. The goal is to replace the labor-intensive production system. Please write a memo to the executive team explaining why new production equipment could affect the production and purchases budgets.