Please help me to figure this problem, including your caculation how you got tha
ID: 2460389 • Letter: P
Question
Please help me to figure this problem, including your caculation how you got that answer. THANK YOU!!
Alcott Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Bob Anderson, the controller, is responsible for preparing Alcott's master budget and has accumulated the following information for 2015: (Click the icon to view the information.) Alcott has a labor contract that calls for a wage increase to $13 per hour on April 1, 2015. New labor-saving machinery has been installed and will be fully operational by March 1, 2015. Alcott expects to have 19,500 frames on hand at December 31, 2014, and it 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. Read the requirements. In addition to wages, direct manufacturing labor-related costs include pension contributions of $0.50 per hour, worker's compensation insurance of $0.20 per hour, employee medical insurance of $0.40 per hour, and Social Security taxes. Assume that as of January 1, 2015, the Social Security tax rates are 7.5% for employers and 7.5% for employees. The cost of employee benefits paid by Alcott on its employees is treated as a direct manufacturing labor cost. Prepare a production budget and a direct manufacturing labor budget for Alcott Company by month and for the first quarter of 2015. You may combine both budgets in one schedule. The direct manufacturing labor budget should include labor-hours and show the details for each labor cost category. Start the schedule by preparing the production budget and calculating the total hours of direct manufacturing labor 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 labor by month, then quarter. (Enter the direct manufacturing labor-hours per unit to one decimal place, X.X. Do not round interim calculations, and then enter all amounts in the budget [other than the direct manufacturing labor-hours per unit] to the nearest whole number.)Explanation / Answer
Solution:
1) Production Budget for the first quarter of 2015
Particulars
January
February
March
Total
Estimated Sales Units
11000
15000
9000
35000
Add: Ending Inventory (100% of following month's sale + 50% of the second following month' sales)
19500
14000
15000
48500
Less: Beginning Inventory (Ending Inventory of last month)
(19500)
(19500)
(14000)
(53000)
Budgeted Production Units
11000
9500
10000
30500
2) Direct Manufacturing Labor Budget for the first quarter of 2015
Particulars
January
February
March
Total
Budgeted Production Units
11000
9500
10000
30500
Direct Manufacturing Labor Hours Per Unit
2
2
1
Total Direct Manufacturing Labor Hours
22000
19000
10000
51000
Wages Per Direct manufacturing labor hour
$10
$10
$10
Wages for Direct Manufacturing Labor
$220,000
$190,000
$100,000
$510,000
Add: Social Security Tax @ 15%
$33,000
$28,500
$15,000
$76,500
Total Wages for Direct Manufacturing Labor
$253,000
$218,500
$115,000
$586,500
Working Note for Production Budget and Direct Manufacturing Labour Budget
for the first quarter of 2015 (January to March)
Particulars
January
February
March
April
May
Estimated Sales Units
11000
15000
9000
10000
10000
Add: Ending Inventory (100% of following month's sale + 50% of the second following month' sales)
19500
14000
15000
10000
0
Less: Beginning Inventory (Ending Inventory of last month)
(19500)
(19500)
(14000)
(15000)
(10000)
Budgeted Production Units
11000
9500
10000
5000
0
Direct Manufacturing Labor Hours Per Unit
2
2
1
1
1
Total Direct Manufacturing Labor Hours
22000
19000
10000
5000
Wages Per Direct manufacturing labor hour
$10
$10
$10
$13
$13
Wages for Direct Manufacturing Labor
$220,000
$190,000
$100,000
$65,000
$0
Add: Social Security Tax @ 15%
$33,000
$28,500
$15,000
$9,750
Total Wages for Direct Manufacturing Labor
$253,000
$218,500
$115,000
$74,750
Particulars
January
February
March
Total
Estimated Sales Units
11000
15000
9000
35000
Add: Ending Inventory (100% of following month's sale + 50% of the second following month' sales)
19500
14000
15000
48500
Less: Beginning Inventory (Ending Inventory of last month)
(19500)
(19500)
(14000)
(53000)
Budgeted Production Units
11000
9500
10000
30500