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3. Clark Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Ron Jangles, the controller, is responsible for preparing Clark's master budget and has accumulated the following information for 2018 (Click the icon to view some of the financial information.) Click the icon to view additional information) Read the requirements Click the icon to see the Worked Solution. Requirement 1. Prepare a production budget and a direct manufacturing labor cost budget for Clark 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. 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 direct manufacturing labor-hours per unit to the nearest whole number.) March Quarter Clark Company Budget for Production and Direct Manufacturing Labor For the Quarter Ended March 31, 2018 January February Budgeted sales (units) Add target ending finished goods inventory (units) Total requirements (units) Deduct beginning finished goods inventory (units) Units to be produced Direct manufacturing labor-hours per unit Total hours of direct manufacturing labor time needed Direct manufacturing labor costs Wages Pension contributions Workers' compensation insurance Employee medical insurance Social Security tax employer's share) Total direct manufacturing labor costs Requirement 2. What actions has the budget process prompted Clark's management to take? (Select Clark's management would look for ways to that apply.) (2) Requirement 3. How might Clark's managers use the budget developed in requirement to better manage the company? Clark's management should work with employees to (3) 1. Data Table Estimated sales in units Selling price Direct manufacturing labor hours per unit Wage per direct manufacturing labor-hour 2018 January February March April May 10,000 18.000 5.000 8.000 8.000 $ 56.00 $ 50.00 $ 50.00 $ 50.00 $ 50.00 2.5 25 1.5 1.5 15 $ 1200 $ 12.00 $ 12.00 $ 14.00 $ 14.00 2 More Info In addition to wages, direct manufacturing labor related costs include pension contributions of $0.60 per hour, worker's compensation insurance of $0.10 per hour employee medical insurance of $0.50 per hour and Social Security taxes. Assume that as of January 1, 2018, the Social Security tax rates are 7.5% for employers and 7.6% for employees. The cost of employee benefits paid by Clark on its direct manufacturing employees is treated as a direct manufacturing Labor cost hensive Problem Clark has a labor contract that calls for a wage increase to S14 per hour on April 1. 2018 New Inbor-saving machinery has been installed and will be fully operational by March 1, 2018. Clark expects to have 20,500 frames on hand at December 31, 2017, and it has a policy of carrying an end-of-month invertory of 100% of the following month's sales plus 50% of the second following month's sales 3: Requirements 1. Prepare a production budget and a direct manufacturing labor cost budget for Clark 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 Clark's management to take? 3. How might Clark's managers use the budget developed in requirement 1 to better manage the company (1) O eliminate pension contributions and medical insurance payments. O eliminate the social security tax and workers' compensation insurance O reduce finished goods inventories. O reduce the manufacturing labor hours needed to produce each unit. (2) O O eliminate pension contributions and medical insurance payments. eliminate the social security tax and workers' compensation insurance O reduce finished goods inventories. O reduce the manufacturing labor hours needed to produce each unit. (3) O decrease labor productivity. increase inventory levels. increase labor productivly. reduce the social security tax rate. o ID: E6-29 (similar to) 4. "Capital budgeting has the same focus as accrual accounting." Do you agree? Explain. O O O A. No. Capital budgeting focuses on an individual investment project throughout its life, which is often longer than a year, and recognizes the time value of money. Accrual accounting focuses on a particular accounting period, often a year, with an emphasis on income determination. B No. Capital budgeting focuses on a particular accounting period, often a year, with an emphasis on income determination. Accrual accounting focuses on activities that extend over multiple periods, often longer than a year, and recognizes the time value of money. C. Yes. While capital budgeting examines an individual investment and accrual accounting examines the collective investments of a business, both capital budgeting and accrual accounting focus on the income earned from investments over their expected lives D. Yes. While capital budgeting uses a discounted cash flow analysis and accrual accounting uses an accrued income analysis, both capital budgeting and accrual accounting focus on making long-run planning decisions for investments in projects. O Clark Company makes and sells artistic frames for pictures of weddings an d other special events. Ron Janges the corre preparing Clark's master budget and has accumulated the following information for 2018 Click the icon to view some of the financial information) 2 click the icon to view additional information) Read the requirements sponse Click the icon to see the Worked Solution. OM Requirement 1. Prepare a production budget and a direct manufacturing labor cost budget for Clark 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 tabor hours and show the details for each labor cost category 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 will amounts in the budget (other than the direct manufacturing labor hours per unit to the nearest whole number.) Clark Company Budget for Production and Direct Manufacturing Labor For the Quarter Ended March 31, 2018 January February March Quarter Budgeted sales (units) Add target ending finished goods inventory (units) Total requirements (units) Deduct beginning finished goods inventory (units) Units to be produced Direct manufacturing labor-hours per unit Total hours of direct manufacturing labor time needed Direct manufacturing labor costs Wages Pension contributions Workers' compensation insurance Employee medical insurance Social Security tax (employer's share) Total direct manufacturing labor costs Requirement 2. What actions has the budget process prompted Clark's management to take? (Select all that apply) Clark's management would look for ways to (2) Requirement 3. How might Clark's managers use the budget developed in requirement to better manage the company? Clark's management should work with employees to (3) 1: Data Table 2018 Estimated sales in units Selling price Direct manufacturing labor-hours per unit Wage per direct manufacturing labor-hour January February March April May 10,000 18,000 5,000 3,000 3,000 $ 56.00 $ 50.00 $ 50.00 $ 50.00 50.00 2.5 2.5 1.5 15 15 $ 12.00 $ 12.00 $ 12,00 $ 14.00 $ 14.00 2: More Info In addition to wages, direct manufacturing labor-related costs include pension contributions of $0.50 per hour, worker's compensation insurance of $0.10 per nour employee medical insurance of $0.50 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 Clark on its direct manufacturing employees is treated as a direct mandaluring labor cost Clark has a labor contract that calls for a wage increase to 14 per hour 1 2018 New labor-saving machinery has been installed and will be operational by March 1. 2018. Clark expects to have 20.500 frames on hand at December 31, 2017 and it has a policy of carrying an end-of- month vento of 100% of the following month's sales plus 50% of the second following month's sales. 3: Requirements 1. Prepare a production budget and a direct manufacturing labor cost budget for Clark 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 Clark's management to take? 3. How might Clark's managers use the budget developed in requirement 1 to better manage the company? (1) O eliminate pension contributions and medical insurance payments. O eliminate the social security tax and workers' compensation insurance. O reduce finished goods inventories. O reduce the manufacturing labor hours needed to produce each unit (2) O O eliminate pension contributions and medical insurance payments o eliminate the social security tax and workers' compensation insurance reduce finished goods inventories. O reduce the manufacturing labor hours needed to produce each unit. (3) O decrease labor productivity. increase inventory levels. increase labor productivty. reduce the social security tax rate. o ID: E6-29 (similar to) 3. Clark Company makes and sells artistic frames for pictures of weddings, graduations, and other special events. Ron Jangles, the controller, is responsible for preparing Clark's master budget and has accumulated the following information for 2018: (Click the icon to view some of the financial information) (Click the icon to view additional information.) Read the requirements Only Alt Click the icon to see the Worked Solution. Requirement 1. Prepare a production budget and a direct manufacturing labor cost budget for Clark 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 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, XX. Do not round interim calculations, and then enter all amounts in the budget (other than the direct manufacturing labor-hours per unit to the nearest whole number.) Clark Company Budget for Production and Direct Manufacturing Labor For the Quarter Ended March 31, 2018 January February March Quarter Budgeted sales (units) Add target ending finished goods inventory (units) Total requirements (units) Deduct beginning finished goods inventory (units) Units to be produced Direct manufacturing labor-hours per unit Total hours of direct manufacturing labor time needed M ? Direct manufacturing labor costs: Wages Pension contributions Workers' compensation insurance Employee medical insurance Social Security tax (employer's share) Total direct manufacturing labor costs Requirement 2. What actions has the budget process prompted Clark's management to take? (Select all that apply) Clark's management would look for ways to (2) Requirement 3, How might Clark's managers use the budget developed in requirement 1 to better manage the company? Clark's management should work with employees to (3) 1: Data Table Estimated sales in units Selling price Direct manufacturing labor-hours per unit Wage per direct manufacturing labor-hour 2018 January February March 10,000 18,000 5,000 $ 56.00 $ 50.00 $ 50.00 $ 2.5 2.5 1.5 $ 12.00 5 12.00 $ 12.00 $ April 8,000 50.00 $ 1.5 14.00 $ May 8,000 50.00 1.5 14.00 - 2: More Info In addition to wages, direct manufacturing laborrelated costs include pension contributions of 50.60 per hour workers compensation insurance of 50.10 per ve medical insurance of $0.50 per hour, and Social Security taxes. Assume that as of January 1, 2018. The Social Security facrames are 1.5 employers and 7.5% for employees. The cost of employee benefits paid by Clark on its direct manufacturing employees is treated as a direct manufacturing Labor cost Clark has a labor contract that calls for a wage increase to $14 per hour on April 1, 2018. New labor-saving machinery has been installed and will be operational by March 1, 2018. Clark expects to have 20,500 frames on hand at December 31, 2017, and 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 3: Requirements 1. Prepare a production budget and a direct manufacturing labor cost budget for Clark 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 Clark's management to take? 3. How might Clark's managers use the budget developed in requirement 1 to better manage the company? (1) O O eliminate pension contributions and medical insurance payments. O eliminate the social security tax and workers' compensation insurance O reduce finished goods inventories. reduce the manufacturing labor hours needed to produce each unit. (2) O O eliminate pension contributions and medical insurance payments. o eliminate the social security tax and workers' compensation insurance. o reduce finished goods inventories. O reduce the manufacturing labor hours needed to produce each unit. (3) O decrease labor productivity. increase inventory levels. increase labor productivty. reduce the social security tax rate. o o ID: E6-29 (similar to)
