Check my Problem 9-31 Production and Direct-Labor Budgets: Activity-Based Overhead Budget (LO 9-3, 9-4, 9- 5, 9-6) The following information applies to the questions displayed below] Spiffy Shades Corporation manufactures artistic frames for sunglasses. Talia Demarest, controller, is responsible for preparing the company's master budget. In compiling the budget data for 20x1, Demarest has learned that new automated production equipment will be installed on March 1. This will reduce the direct labor per frame from 2.0 hours to 1.75 hours Labor-related costs include pension contributions of $1.05 per hour, workers' compensation insurance of $0.75 per hour, employee medical insurance of $3 per hour, and employer contributions to Social Security equal to 7.00 percent of direct-labor wages. The cost of employee benefits paid by the company on its employees is treated asa direct-labor cost. Spiffy Shades Corporation has a labor contract that calls for a wage increase to $16.00 per hour on April 1, 20x1. Management expects to have 25,200 frames on hand at December 31, 20x0, and has a policy of carrying an end-of-month inventory of 100 percent of the following month's sales plus 60 percent of the second following month's sales These and other data compiled by Demarest are summarized in the following table. January February March 1.75 14.00 $ 14.00 13,000 April May Direct-labor hours per unit Wage per direct-labor hour Estimated unit sales Sales price per unit Production overhead: 1.75 2.0 $14.00 15,000 2.0 1.75 16.00$ 16.00 14,000 $ 70.00 67.50 67.50 67.50$ 67.50 17,000 14,000 3.00 3.00 4.00 4.004.0 9.009.009.00 Shipping and handling (per unit sold) $3.003.00 3.00 Purchasing, material handling, and inspection (per unit produced) other production overhead (per direct- $ 4.00 4.00 $ 9.00 9.00 labor hour) K Prev of 9 Next>