Bullen & Company makes and sells glare filters for microcomputer monitors. John Crane, controller, is responsible for preparing Bullen’s master budget and has assembled the data below for next year. The direct labor rate includes wages and all employee-related benefits and payroll taxes. Labor- saving machinery will be fully operational by March. Also, as of March 1, the company’s union contract calls for an increase in direct labor wages that is included in the direct labor rate.

Bullen expects to have 10,000 glare filters in beginning inventory and has a policy of carrying 50 percent of the following month’s projected sales in inventory. Budgeted sales and cost data are as follows.

REQUIRED

A. Prepare the following budgets for the first quarter. Be sure to show supporting calculations:

(1) Production budget in units, 

(2) Schedule of direct labor hours required, 

(3) Schedule of the cost of direct materials used, 

(4) Revenue budget.

B. Calculate the total budgeted contribution margin for the first quarter. Be sure to show supporting calculations.

C. Describe at least three behavioral considerations in the profit-planning and budgeting process.

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March 16,000 April January 20,000 February 24,000 18,000 Estimated unit sales Sales price per unit Direct labor hours per unit Direct labor hourly rate Direct materials cost per unit $80 4.0 $15 $10 $80 4.0 $15 $10 $75 3.5 $16 $10 $75 3.5 $16 $10