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2006 DIRECT MATERIAL AND INVENTORY BUDGET
INFORMATION
The production department worked in conjunction with both the sales
and purchasing departments in developing desired projected inventory
levels for December 31, 2006. Information regarding beginning and
desired ending inventories for 2006 are as follows:
Hint: Remember that each gallon of paint requires two pounds of
pigment.
2006 DIRECT LABOR BUDGET INFORMATION
During 2005, a new contract was signed with the union. As part of
that agreement, no worker can work in more than one department, and
no single worker can work over 2,000 hours during the year. This
means that for every 2,000 hours of labor that is required for
production in each department, one hourly employee is needed. For
example, if a department needs 10,150 labor hours during the year,
six employees will be needed (10,150 total hours /2,000 per employee
= 5.075 which needs to be rounded to 6 employees).
The standard direct labor rate will increase $0.25 per hour over the
2005 rate.
Additional information regarding employee benefits is included in the
section on manufacturing overhead.
2006 OVERHEAD BUDGET INFORMATION
The following information is available regarding the actual overhead
costs incurred for 2005:
2006 SALES DEPARTMENT INFORMATION