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.

Problem 21-1B

Budgeting Systems for Management Accounting Warren / Reeve / Duchac Problem 21-1B solution

Forecast sales volume and sales budget
Van Gogh Frame Company prepared the following sales budget for the current year:

At the end of December 2010, the following unit sales data were reported for the year:

For the year ending December 31, 2011, unit sales are expected to follow the patterns established during the year ending December 31, 2010. The unit selling price for the 8'' x 10'' frame is expected to increase to $16, and the unit selling price for the 12'' x 16'' frame is expected to increase to $26, effective January 1, 2011.

1. Compute the increase or decrease of actual unit sales for the year ended December 31, 2010, over budget. Use the minus sign to indicate decreases for amounts and percents.

2. Assuming that the trend of sales indicated in part (1) is to continue in 2011, compute the unit sales volume to be used for preparing the sales budget for the year ending December 31, 2011. Use the minus sign to indicate any percentage decreases.

3. Prepare a sales budget for the year ending December 31, 2011.

Problem 21-2A

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

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

The budget director of Regal 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 August 2010 is summarized as follows:

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

b. Estimated inventories at August 1:

c. Desired inventories at August 31:

d. Direct materials used in production:

e. Anticipated purchase price for direct materials:

f. Direct labor requirements:

1. Prepare a sales budget for August.

2. Prepare a production budget for August. Enter all amounts as positive numbers.

3. Prepare a direct materials purchases budget for August.

4. Prepare a direct labor cost budget for August.