14-6. Quarterly Bonus Allotment. Aquapipes, Inc. is a manufacturer of standard pipe fittings for water and sewage lines. A bonus is paid to its employees based upon the production recorded each calendar quarter. Normal production is set at 240,000 units per quarter. A bonus of $.10 per unit is paid for any units in excess of the normal output for each quarter. Distribution of the bonus is made on the following point basis: Employees Participating 1 Works manager.. 2 Production engineers. 5 Shop foremen... 1 Storeskeeper.. 5 Factory office clerks.. 150 Factory workers.... Points Allowed for Each Employee 250 200 200 100 10 20 CH. 14 CONTROLLING AND ACCOUNTING FOR LABOR COSTS 431 The employees' earnings are not penalized for any month in which the actual output falls below the monthly average of the normal quarterly production. In such a case, the deficiency is deducted from any excess in subsequent months before any bonus is earned by and paid to the employees. At the end of March, cumulative actual production amounted to 270,000 units. Required: (1) A calculation showing the amount of bonus payable to the employees in the different classifications. (2) Journal entries at the end of each month on the basis of the production figures: January, 75,000 units; February, 94,000 units; March, 101,000 units. (3) A statement as to whether this bonus is considered a direct labor cost or a factory overhead item and its position on the income statement.