Bullen & Company makes and sells high-quality glare filters for microcomputer monitors. John Crave, controller, is responsible for preparing Bullen’s master budget and has assembled the following data for 2007. The direct labor rate includes wages, all employee-related benefits, and the employer’s share of FICA. 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 inventory at December 31, 2006, and has a policy of carrying 50 percent of the following month’s projected sales in inventory.

2007
January February March April
Estimated unit sales 20,000 24,000 16,000 18,000 

Sales price per unit $80 $80 $75 $75 

Direct labor hours per unit 4.0 4.0 3.5 3.5

Direct labor hourly rate $15 $15 $16 $16 

Direct materials cost per unit $10 $10 $10 $10

Required: 

1. Prepare the following monthly budgets for Bullen & Company for the first quarter of 2007. Be sure to show supporting calculations. 

a. Production budget in units 

b. Direct labor budget in hours 

c. Direct materials cost budget 

d. Sales budget 

2. Calculate the total budgeted contributions margin for Bullen & Company for the first quarter of 2007. Be sure to show supporting calculations.