Boston Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Ralph Brookes, the controller, is responsible for preparing the master budget and has accumulated the following information for 2021:

January February March April May

Estimated sales (units) 15,000 17,000 12,000 10,000 10,000

Selling price $55 $54 $54 $54 $54

Direct labor hours per unit 4 4 3 3 3

Direct labor rate per hour $12 $12 $12 $15 $15

In addition to wages, direct manufacturing labor-related costs include pension contributions of $0.60 per hour, workers compensation insurance of $0.20 per hour, employee medical insurance of $0.70 per hour, and Social Security taxes. Assume that as of January 1, 2021, the Social Security tax rates are 7.5% for employers and 7.5% for employees. The cost of employee benefits paid by DeWitt on its direct manufacturing employees is treated as a direct manufacturing labor cost.Boston has a labor contract that calls for a wage increase to $15 per hour on April 1, 2021. New labor-saving machinery has been installed and will be fully operational by March 1, 2021. Boston expects to have 18,000 frames on hand at December 31, 2020, and it has a policy of carrying an end-of-month inventory of 100% of the following months sales plus 40% of the second following months sales.

Required:

Prepare a sales budget, a production budget, and a direct manufacturing labor cost budget for Boston Company by month and for the first quarter of 2021. 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.