Choo-Foo Company makes and sells artistic frames for pictures. The controller is responsible for preparing the master budget and has accumulated the following information for 2012:

Choo-Foo has a labour contract that calls for a wage increase to $9.00 per hour on April 1. It has installed new labour saving machinery, which will be fully operational by March 1.
Choo-Foo expects to begin the year with 16,000 frames on hand and has a policy of carrying an end-of-month inventory of 100% of the following month's sales, plus 50% of the next month's sales.
Instructions
(a) Prepare a production budget and a direct labour budget for Choo-Foo by month and for the first quarter of the year. The direct labour budget should include direct labour hours and show the detail for each direct labour cost category.
(b) For each item used in Choo-Foo's production budget and its direct labour budget, identify the other component(s) of the master budget (budget package) that would also use these data?

Transcribed Image Text:

Estimated unit sales Sales price per unit Direct labour hours per unit Wage per direct labour hour anary 10,000 50.00 March pril 9,000 $47.50 May 9,000 $47.50 12,000 47.50 8,000 $47.50 $8.00 $ 8.00 $8.00 $9.00 $9.00