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• Unit sales growth will continue on its current increasing trend
• An exponential growth function with the year being the independent
variable and the sales volume being the dependent variable will be an
appropriate sales projection method.
2006 DIRECT MATERIAL AND INVENTORY BUDGET
INFORMATION
The production department worked in conjunction with both the sales
and purchasing departments in developing desired projected inventory
levels for December 31, 2006. Information regarding beginning and
desired ending inventories for 2006 are as follows:
Hint: Remember that each gallon of paint requires two pounds of
pigment.
2006 DIRECT LABOR BUDGET INFORMATION
During 2005, a new contract was signed with the union. As part of that
agreement, no worker can work in more than one department, and no
single worker can work over 2,000 hours during the year. This means
that for every 2,000 hours of labor that is required for production in
each department, one hourly employee is needed. For example, if a
department needs 10,150 labor hours during the year, six employees
will be needed (10,150 total hours /2,000 per employee = 5.075 which
needs to be rounded to 6 employees).
The standard direct labor rate will increase $0.25 per hour over the
2005 rate.
Additional information regarding employee benefits is included in the
section on manufacturing overhead.
2006 OVERHEAD BUDGET INFORMATION
The following information is available regarding the actual overhead
costs incurred for 2005: