8) In the past few years, Phoenix Company has made many changes to their factory production process and have also experienced significant employee turnover. Management believes that operations have been more stable in the most recent year and are representative of future operations. Because of this expected stability, management is proposing standards for direct labor be based on the most current results Actual = 14,400 Standard = 19,834

a) A 3% wage increase has been authorized for all direct labor employees. Add the 3% increase to the ACTUAL average labor rate from 3c. This will be the new standard labor rate.

b) The company anticipates the standard direct labor hour will be 0.85 hours per finished good. this is slightly lower than their previous actual average (0.90) because management expects more efficiency given employee experience, etc.

c) Overhead costs are expected to increase 2.5% due to inflation. Calculate the new variable overhead standard as 2.5% higher that their most current actual rate of $10.00

d) Calculate budgeted fixed overhead as 2.5% higher than the previous year's actual.

Phoenix Company's actual income statement for 2019 follows. PHOENIX COMPANY Statement of Income from Operations For Year Ended December 31, 2019 Sales (19,000 units) $4, 798, 900 Cost of goods sold Direct materials $1, 157, 090 Direct labor 294, 000 Machinery repairs (variable cost) 87,060 Depreciation-Plant equipment (straight- line) 330, 000 Utilities (fixed cost is $147,500) 222,500 Plant management salaries 224,090 2, 314,500 Gross profit 2, 483,500 Selling expenses Packaging 111, 250 Shipping 144,500 Sales salary (annual) 276,090 531, 750 General and administrative expenses Advertising expense 141, 090 Salaries 251, 090 Entertainment expense 113, 500 505, 500 Income from operations $1, 446, 250