Required information

PR $9-31($Algo$)$ 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.$]$

Shibby Shades Incorporated manufactures artistic frames for sunglasses. Talia Demarest, controller, is responsible for

preparing the company's master budget. In compiling the budget data for $20$x$1,$ Demarest has learned that new automated

production equipment will be installed on March $1.$ This will reduce the direct labor per frame from $5\mathrm{.}0$ hours to $4\mathrm{.}75$ hours.

Labor$-$related costs include pension contributions of $$1\mathrm{.}30$ per hour, workers' compensation insurance of $$1\mathrm{.}00$ per hour,

employee medical insurance of $$4$ per hour, and employer contributions to Social Security equal to $7\mathrm{.}00$ percent of direct$-$

labor wages. The cost of employee benefits paid by the company on its employees is treated as a direct$-$labor cost.

Shibby Shades Incorporated has a labor contract that calls for a wage increase to $$17\mathrm{.}00$ per hour on April $1,201.$

Management expects to have $17,200$ frames on hand at December $31,200,$ 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.

PR $9-31($Algo$)$ Part $1$: Prepare a production budget and a direct$-$labor budget...

Required:

Prepare a production budget and a direct$-$labor budget for Shibby Shades Incorporated by month and for the first quarter of $201.$

Note: Round "Direct$-$labor hours per unit" to $2$ decimal places.