DeWitt Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Ron Bahar, the controller, is responsible for preparing DeWit's master budget and has accumulated the following information for 2018: 2018 March April May January 12,000 February 13,000 $ 52.00 3.0 $ 11.00 Estimated sales in units Selling price Direct manufacturing labor-hours per unit Wage per direct manufacturing labor-hour 11,000 11,000 6,000 $52.00 2.0 $ 52.00 2.0 $ 53.00 3.0 $ 52.00 2.0 $ 12.00 $ 11.00 $11.00 $ 12.00
In addition to wages, direct manufacturing labor-related costs include pension contributions of $0.40 per hour, worker’s compensation insurance of $0.10 per hour, employee medical insurance of $0.50 per hour, and Social Security taxes. Assume that as of January 1, 2018, the Social Security tax rates are 7.5% for employers and 7.5% for employees. The cost of employee benefits paid by DeWitt on its direct manufacturing employees is treated as a direct
Q1. Prepare a production budget and a direct manufacturing labor cost budget for DeWitt Company by month and for the first quarter of 2018. You may combine both budgets in one schedule. The direct manufacturing labor cost budget should include labor-hours and show the details for each labor cost category.
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