Delray Manufacturing needs to better budget and analyze costs. While Delray has experienced high sales growth, it has struggled to effectively manage costs and inventories. Delray aims to end each month with direct materials inventory equal to 40% of next months production needs. Each finished unit requires 4 pounds of direct materials and 2 hours of direct labor. Delray budgets $12,000 of fixed overhead costs per month. A Tableau Dashboard is provided to aid our analysis.

1. Prepare a direct labor budget for each month of April, May, and June. 2. Prepare a factory overhead budget for each month of April, May, and June. 3. The company is considering hiring more skilled workers. These workers would increase the direct labor rate to $21 per hour, and reduce direct labor hours required per finished good to 1.5 hours. Compute the direct labor budget for April assuming the company (a) does not hire more skilled workers and (b) hires more skilled workers. 4. The company is considering hiring more skilled workers. These workers would increase the direct labor rate to $21 per hour, and reduce direct labor hours required per finished good to 1.5 hours. How would this change to more skilled workers impact total budgeted factory overhead (assuming the budgeted variable overhead rate is unchanged)?

Sales Forecast & Production Budget (in Units) 1,500 Budgeted Production Sales Forecast 1,200 Budgeted Production ( 1125 900 1025 Sales Forecast 600 300 O Ending Direct Materials Inventory by Month March April Solve for this value May Solve for this value June Solve for this value O 400 800 1200 1600 2000 Direct Materials (Pounds) Direct labor rate Direct materials cost Variable overhead rate 25 DELRAY MANUFACTURING Direct Labor Budget For April, May, and June April May 880 1,100 2.00 2.00 June Budgeted production (units) Direct labor hours per unit (hrs.) Total labor hours needed 1,075 units 2.00 hours per unit Budgeted direct labor cost DELRAY MANUFACTURING Factory Overhead Budget For April, May, and June April May June Total labor hours needed Budgeted variable overhead Budgeted fixed overhead Total budgeted factory overhead DELRAY MANUFACTURING Direct Labor Budget for April Does Not Hire Does Hire 880 880 units Budgeted production (units) Total labor hours needed Budgeted direct labor cost