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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
The sales department consists of 10 representatives who report directly
to the president. Each individual is on a base salary plus a commission,
and the sales reps also submit meal and entertainment expenses for
reimbursement. (In 2005, the meal and entertainment expenses were
limited to $50 per week per sales representative based upon a 52 week
year.)
The following information is available regarding the actual selling costs
incurred for 2005:
No change
2006 ADMINISTRATIVE BUDGET INFORMATION