Estimated sales in units Selling price Direct manufacturing labour-hours per unit Wage per direct manufacturing labour- hour 2022 January February March 11,000 19,000 $ 56.00 $ 2.0 51.00 $ 2.0 6,000 51.00 $ 1.0 April May 10,000 51.00 $ 1.0 10,000 51.00 1.0 $ 10.00 $ 10.00 $ 10.00 $ 11.00 $ Direct manufacturing labour-related costs include pension contributions of $0.50 per hour, workers' compensation insurance of $0.15 per hour, employee medical insurance of $0.30 per hour, and employment insurance, in addition to wages. Assume that as of January 1, 2022, the employment insurance rates are 7.5% of wages for employers and 7.5% of wages for employees. The cost of employee benefits paid by McGrath for its employees is treated as a direct manufacturing labour cost. 11.00 The McGrath Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Martin Flack, the company controller, is responsible for preparing the master budget and has accumulated the following information for 2022. (Click the icon to view the information.) McGrath has an employee labour contract that calls for a wage increase to $11.00 per hour on April 1, 2022. New labour-saving machinery has been installed and will be fully operational by March 1, 2022. The controller has been informed that the company expects to have 20,500 frames on hand at December 31, 2021, and has a policy of carrying an end-of-month inventory of 100% of the following month's sales plus 50% of the second following month's sales. Required Prepare a production budget and direct manufacturing labour budget for the McGrath Company by month and for the first quarter of 2022. The direct manufacturing labour budget should include labour-hours and show the details for each labour cost category.
Estimated sales in units Selling price Direct manufacturing labour-hours per unit Wage per direct manufacturing labour- hour 2022 January February March 11,000 19,000 $ 56.00 $ 2.0 51.00 $ 2.0 6,000 51.00 $ 1.0 April May 10,000 51.00 $ 1.0 10,000 51.00 1.0 $ 10.00 $ 10.00 $ 10.00 $ 11.00 $ Direct manufacturing labour-related costs include pension contributions of $0.50 per hour, workers' compensation insurance of $0.15 per hour, employee medical insurance of $0.30 per hour, and employment insurance, in addition to wages. Assume that as of January 1, 2022, the employment insurance rates are 7.5% of wages for employers and 7.5% of wages for employees. The cost of employee benefits paid by McGrath for its employees is treated as a direct manufacturing labour cost. 11.00 The McGrath Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Martin Flack, the company controller, is responsible for preparing the master budget and has accumulated the following information for 2022. (Click the icon to view the information.) McGrath has an employee labour contract that calls for a wage increase to $11.00 per hour on April 1, 2022. New labour-saving machinery has been installed and will be fully operational by March 1, 2022. The controller has been informed that the company expects to have 20,500 frames on hand at December 31, 2021, and has a policy of carrying an end-of-month inventory of 100% of the following month's sales plus 50% of the second following month's sales. Required Prepare a production budget and direct manufacturing labour budget for the McGrath Company by month and for the first quarter of 2022. The direct manufacturing labour budget should include labour-hours and show the details for each labour cost category.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Estimated sales in units
Selling price
Direct manufacturing labour-hours per
unit
Wage per direct manufacturing labour-
hour
January February
11,000
19,000
56.00 $
$
2.0
51.00 $
2.0
2022
March
6,000
51.00 $
1.0
April May
10,000
51.00 $
1.0
10,000
51.00
1.0
$ 10.00 $
10.00 $
10.00 $
11.00 $
Direct manufacturing labour-related costs include pension contributions of $0.50 per hour, workers' compensation insurance of
$0.15 per hour, employee medical insurance of $0.30 per hour, and employment insurance, in addition to wages. Assume that as
of January 1, 2022, the employment insurance rates are 7.5% of wages for employers and 7.5% of wages for employees. The cost
of employee benefits paid by McGrath for its employees is treated as a direct manufacturing labour cost.
11.00
The McGrath Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Martin Flack, the company controller, is
responsible for preparing the master budget and has accumulated the following information for 2022.
(Click the icon to view the information.)
y has been installed and
McGrath has an employee labour contract that calls for a wage increase to $11.00 per hour on April 1, 2022. New labour-s ma
will be fully operational by March 1, 2022. The controller has been informed that the company expects to have 20,500 frames on hand at December 31, 2021, and
has a policy of carrying an end-of-month inventory of 100% of the following month's sales plus 50% of the second following month's sales.
Required
Prepare a production budget and direct manufacturing labour budget for the
McGrath Company by month and for the first quarter of 2022. The direct
manufacturing labour budget should include labour-hours and show the details for
each labour cost category.
Transcribed Image Text:Start the schedule by preparing the production budget and calculating the total hours of direct manufacturing labour time needed for the three months in the
quarter. Then calculate the values for the quarter. Finish by preparing the bottom portion of the schedule for the direct manufacturing labour by month, then
quarter. (Round your answers to the nearest whole number.)
McGrath Company
Budget for Production and Direct Manufacturing Labour
For the Quarter Ended March 31, 2022
Budgeted sales (units)
Add target ending finished goods inventory (units)
Total requirements (units)
January February
Deduct beginning finished goods inventory (units)
Units to be produced
Direct manufacturing labour-hours per unit
Total hours of direct manufacturing labour time
needed
Direct manufacturing labour costs:
Wages
Pension contributions
Workers' compensation insurance
Employee medical insurance
Employment insurance (employer's share)
Total direct manufacturing labour costs
March
Quarter
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