Mahoney Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Ron Kyler, the controller, is responsible for preparing Mahoney's master budget and has accumulated the following information for 2018: More Info - X Data Table In addition to wages, direct manufacturing labor-related costs include pension contributions of $0.40 per hour, worker's compensation insurance of $0.20 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 Mahoney on its direct manufacturing employees is treated as a direct manufacturing labor cost. Estimated sales in units 2018 January February March April 15,000 18,000 9,000 10,000 $ 55.00 $ 50.50 $ 50.50 $ 50.50 $ 2.5 2.5 1.0 1.0 $ 8.00 $ 8.00 $ 8.00 $ 12.00 $ Selling price Direct manufacturing labor-hours per unit Wage per direct manufacturing labor-hour May 10,000 50.50 1.0 12.00 Mahoney has a labor contract that calls for a wage increase to $12 per hour on April 1, 2018. New labor-saving machinery has been installed and will be fully operational by March 1, 2018. Mahoney expects to have 22,500 frames on hand at 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. Print Done 1. Prepare a production budget and a direct manufacturing labor cost budget for Mahoney 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 2. What actions has the budget process prompted Mahoney's management to take? 3. How might Mahoney's managers use the budget developed in requirement 1 to better manage the company? 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. (Enter the direct manufacturing labor-hours per unit to one decimal place, X.X. Do not round interim calculations, and then enter all amounts in the budget (other than the direc manufacturing labor-hours per unit to the nearest whole number.) Mahoney Company March Budget for Production and Direct Manufacturing Labor For the Quarter Ended March 31, 2018 January February Budgeted sales (units) 15000 18000 Add target ending finished goods inventory (units) 27000 13500 Total requirements (units) 42000 31500 Deduct beginning finished goods inventory (units) Units to be produced 9000 15000 24000 Direct manufacturing labor-hours per unit Total hours of direct manufacturing labor time needed I LIICHI ILI AI