Question:

Week 4 Problem 1	NAME:
Production, labor, materials, and revenue budgets (CMA adapted) Baxter & Company make and sells glare filters for microcomputer monitors. Roger Blake, controller, is responsible for preparing Baxter's master budget and has assembled the data below for next year.
The direct labor rate includes wages and all employee-related benefits and payroll taxes. 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.
Baxter expects to have 10,000 glare filters in beginning inventory and has a policy of carrying 50 percent of the following month's projected sales in inventory. Budgeted sales and cost data are as follows.
Notice that the first quarter is the first three months. April's information is needed for some of March's budget calculations.
January	February	March	April
Estimated unit sales	22,000	26,000	20,000	18,000
Sales price per unit	$ 80.00	$ 80.00	$ 75.00	$ 75.00
Direct labor hours per unit	4.0	4.0	3.5	3.5
Direct labor hourly rate	$ 15.00	$ 15.00	$ 16.00	$ 16.00
Direct materials cost per unit	$ 10.00	$ 10.00	$ 10.00	$ 10.00
A. Prepare the following budgets for the first quarter. Be sure to show supporting calculations:
(1) production budget in units, (2) schedule of direct labor hours required, (3) schedule of
the cost of direct materials used, and (4) revenue budget.
B. Calculate the total budgeted contribution margin for the first quarter. Be sure to show
supporting calculations.
C. Describe at least three behavioral considerations in the profit-planning and budgeting
process.