Problem 21-2B

Budgeting Systems for Management Accounting Warren / Reeve / Duchac Problem 21-2B solution

Sales, production, direct materials purchases, and direct labor cost budgets

The budget director of Outdoor 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 2010 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:

1. Prepare a sales budget for July.

2. Prepare a production budget for July.

3. Prepare a direct materials purchases budget for July.

4. Prepare a direct labor cost budget for July.