Budget plans of Baxter Medical Services are being revised for the last two quarters of 1999. Two main procedures are provided to patients referred by area physicians. Under the revised plan, the forecast volume of proce- dures is estimated as follows:

Personnel schedules indicate that 15 minutes are required for Procedure 1 and 20 minutes for Procedure 2. Technicians labor rate per hour is $15 during the third quarter. On October 1, a $1.00 per hour raise contained in the Baxter labor con- tract with its union will go into effect. 

In preparation of the budget, provision is to be made for fringe benefit costs such as pensions and medical health insurance. The total fringe benefit cost is estimated to be 55 percent of the hourly labor cost for the third quarter. Increased health insurance cost will increase the fringe benefit cost to 60 percent of the hourly labor cost for the fourth quarter. 

Required: 

1. Prepare a budget showing the direct labor cost per procedure and in total dollars for each quarter. 

2. Add a section to the direct labor cost schedule showing the estimated fringe benefit cost and total labor cost for each quarter. Comment on the increase in costs and its possible implications.

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Procedure 1 Procedure 2 Third quarter Fourth quarter 1,200 1,600 1,500 1,800