Answer:
Gourmet Grill Company
1. Sales Budget For the Month Ending July 31
Product Area Unit Sales Unit Selling Total
Volume Price Sales
Backyard Chef: Maine 310 $700 $217,000
Vermont 240 750 180,000
New Hampshire 360 750 270,000
Total 910 667,000
Master Chef: Maine 150 1,200 180,000
Vermont 110 1,300 143,000
New Hampshire 180 1,400 252,000
Total 440 575,000
Total revenue from sales $1,242,000
2. Gourmet Grill Company Production Budget For the Month Ending July 31 Units
Units Backyard Chef Master Chef Total
Expected units to be sold 910 440 1,350
Desired inventory, July 31 40 22 62
Total units available 950 462 1,412
Estimated inventory, July 1 -30 -32 62
Total units to be produced 920 430 1,350
3. Gourmet Grill Company
Direct Labor Cost Budget
For the Month Ending July 31
Stamping Forming Assembly
Units Department Department Department
Backyard Chef 920 460 hrs 552 hrs 920 hrs Master Chef 430 258 hrs 344 hrs 645 hrs
Total Hours required
for production: 718 hrs 896 hrs 1,565 hrs
Total Hourly rate $17 $15 $14
Total direct labor cost $12,206 $13,440 $21,910
Explanation:
1) Data:
A. Estimated sales for July by sales territory:
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
B. Estimated inventories at July 1:
Direct materials:
Grates 290 units
Stainless steel 1,500 lbs.
Burner subassemblies 170 units
Shelves 340 units
Finished products:
Backyard Chef 30 units
Master Chef 32 units
C. Desired inventories at July 31:
Direct materials:
Grates 340 units
Stainless steel 1,800 lbs.
Burner subassemblies 155 units
Shelves 315 units
Finished products:
Backyard Chef 40 units
Master Chef 22 units
D. Direct materials used in production:
In manufacture of Backyard Chef:
Grates 3 units per unit of product
Stainless steel 24 lbs. per unit of product
Burner subassemblies 2 units per unit of product
Shelves 4 units per unit of product
In manufacture of Master Chef:
Grates 6 units per unit of product
Stainless steel 42 lbs. per unit of product
Burner subassemblies 4 units per unit of product
Shelves 5 units per unit of product
E. Anticipated purchase price for direct materials:
Grates $15 per unit
Stainless steel $6 per lb.
Burner subassemblies $110 per unit
Shelves $10 per unit
F. Direct labor requirements:
Backyard Chef:
Stamping Department 0.50 hr. at $17 per hr.
Forming Department 0.60 hr. at $15 per hr.
Assembly Department 1.00 hr. at $14 per hr.
Master Chef:
Stamping Department 0.60 hr. at $17 per hr.
Forming Department 0.80 hr. at $15 per hr.
Assembly Department 1.50 hrs. at $14 per hr.
b) Calculations:
Stamping Forming Assembly
Units Department Department Department
Backyard Chef 1 0.50 hr 0.60 hr 1.00 hr
Total hours required 920 460 hrs 552 hrs 920 hrs
Master Chef 1 0.60 hr 0.80 hr 1.50 hrs
Total hours required 430 258 hrs 344 hrs 645 hrs
Total Hours required
for production: 718 hrs 896 hrs 1,565 hrs
c) Gourmet Grill Company's Sales, Production, and Direct Labor Budgets for July detail the sales units under different product categories and areas. They will guide the management of Gourmet Grill company to make relevant decisions with regard to inventories, production, and sales volume that must be achieved in order to realize the budgets and attin company's objectives. They are very essential in planning, decision making, and control. Based on these budgets, performances will be reviewed, analyzed, and accordingly rewarded.
