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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
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.)