Babcock Builders is a well-regarded construction company that serves as a general contractor for both residential and commercial construction…

Babcock Builders is a well-regarded construction company that serves as a general contractor for both residential and commercial construction projects. One of the company’s signature features is its cabinetry. The company’s founder and president, Bill Babcock, began manufacturing cabinets six years ago in an effort to capitalize on the company’s reputation and the skills of its craftsmen. The company’s production budget for the first seven months of the year is as follows:

Month

Units

January

10,000

February

17,000

March

13,000

April

18,500

May

22,100

June

24,300

July

26,200

Babcock’s most popular cabinet is a small cherry wood cabinet typically used in bathrooms. Each completed unit requires 3.5 hours of direct labor, and the skilled labor costs an average of $25 per hour. The company applies overhead at the rate of $3 per direct labor hour.

A. Prepare a direct labor budget for January through June.

B. Prepare a manufacturing overhead budget for the same period.

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