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.

budgeted production: april 880 units. may 1,100 units. jun 1,075 units. july 1,125 units.

Sales forecast: april 805 units. may 900 units. jun 1025 units. july 875 units.

March: Direct materiald (pounds): 1,408 pounds.

direct labor rate $18 per hour. direct materials cost: $3 per pound VOH rate: $25 per direct labor hour

Sales Forecast & Production Budget (in Units) 1.500+ Budgeted Production Sales Forecast 1.200 Budgeted Production Sales Forecast abril mayo junio julio Ending Direct Materials Inventory by Month March April Solve for this value May Solve for this value June Solve for this value 400 1600 2000 800 1200 Direct Materials (Pounds) Direct labor rate Direct materials cost Variable overhead rate tableau 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)? DELRAY MANUFACTURING Direct Labor Budget For April, May, and June April May 880 1 June 1,075 units ,100 Budgeted production (units) Direct labor hours per unit (hrs.) Total labor hours needed Direct labor rate (per hour) Budgeted direct labor cost May June DELRAY MANUFACTURING Factory Overhead Budget For April, May, and June April Total labor hours needed Variable factory overhead rate per direct labor hr. Budgeted variable overhead Budgeted fixed overhead Total budgeted factory overhead 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. DELRAY MANUFACTURING Direct Labor Budget for April Does Not Hire Does Hire Budgeted production (units) 880 880 units Direct labor hours per unit (hrs.) Total labor hours needed Direct labor rate (per hour) Budgeted direct labor cost