Preparing a direct labor cost budget for February

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Reference no: EM133106657

Question - The budget director of Royal Furniture Company requests estimates of sales, production, and other operating data from the various administrative units every month. Selected information concerning sales and production for February is summarized as follows:

a. Estimated sales of King and Prince chairs for February by sales territory:

Northern Domestic:

King

610 units at $780 per unit

Prince

750 units at $550 per unit

Southern Domestic:

King

340 units at $780 per unit

Prince

440 units at $550 per unit

International:

King

360 units at $850 per unit

Prince

290 units at $600 per unit

b. Estimated inventories at February 1:

Direct materials:

Fabric

420 sq. yds.

Wood

580 linear ft.

Filler

250 cu. ft.

Springs

660 units

Finished products:

King

90 units

Prince

25 units

c. Desired inventories at February 28:

Direct materials:

Fabric

390 sq. yds.

Wood

650 linear ft.

Filler

300 cu. ft.

Springs

540 units

Finished products:

King

80 units

Prince

35 units

d. Direct materials used in production:

In manufacture of King:

Fabric

6.0 sq. yds. per unit of product

Wood

38 linear ft. per unit of product

Filler

4.2 cu. ft. per unit of product

Springs

16 units per unit of product

In manufacture of Prince:

Fabric

4.0 sq. yds. per unit of product

Wood

26 linear ft. per unit of product

Filler

3.4 cu. ft. per unit of product

Springs

12 units per unit of product

e. Anticipated purchase price for direct materials:

Fabric

$12.00

per sq. yd.

Wood

7.00

per linear ft.

Filler

$3.00

per cu. ft.

Springs

4.50

per unit

f. Direct labor requirements:

King:

Framing Department

1.2 hrs. at $12 per hr.

Cutting Department

0.5 hr. at $14 per hr.

Upholstery Department

0.8 hr. at $15 per hr.

Prince:

Framing Department

1.0 hr. at $12 per hr.

Cutting Department

0.4 hr. at $14 per hr.

Upholstery Department

0.6 hr. at $15 per hr.

Required - Preparing a direct labor cost budget for February.

Reference no: EM133106657

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