Austin Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Ron Bahar, the controller, is responsible for preparing Austin's master budget and has accumulated the following information for 2018:

Requirement 1. Prepare a production budget and a direct manufacturing labor cost budget for Austin Company by month and for the first quarter of 2018. You may combine both budgets in one schedule. The direct manufacturing labor cost budget should include labor-hours and show the details for each labor cost category. Start the schedule by preparing the production budget and calculating the total hours of direct manufacturing labor time needed for the three months in the quarter, then calculate the values for the quarter. Finish by preparing the bottom portion of the schedule for the direct manufacturing labor by month, then quarter.

Austin Company
Budget for Production and Direct Manufacturing Labor
For the Quarter Ended March 31, 2018
	January	February	March
Budgeted sales (units)
Add target ending finished goods inventory (units)
Total requirements (units)
Deduct beginning finished goods inventory (units)
Units to be produced
Direct manufacturing labor-hours per unit
Total hours of direct manufacturing labor time needed

Quarter

1: Data Table

	2018
	January	February	March	April	May
Estimated sales in units	10,000	11,000	8,000	9,000	9,000
Selling price	$54.00	$52.50	$52.50	$52.50	$52.50
Direct manufacturing labor-hours per unit	3.0	3.0	2.0	2.0	2.0
Wage per direct manufacturing labor-hour	$10.00	$10.00	$10.00	$11.00	$11.00

2: More info In addition to wages, direct manufacturing labor-related costs include pension contributions of $0.50 per hour, worker's compensation insurance of $0.10 per hour, employee medical insurance of $0.30 per hour, and Social Security taxes. Assume that as of January 1, 2018, the Social Security tax rates are 7.5% for employers and 7.5% for employees. The cost of employee benefits paid by Austin on its direct manufacturing employees is treated as a direct manufacturing labor cost. Austin has a labor contract that calls for a wage increase to $11 per hour on April 1, 2018. New labor-saving machinery has been installed and will be fully operational by March 1, 2018. Austin expects to have 15,000 frames on hand on December 31, 2017, and it has a policy of carrying an end-of-month inventory of 100% of the following month's sales plus 50% of the second following month's sales.