Required information 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 Talla 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 40 hours to 375 hours. Labor related costs include pension contributions of $1.30 per hour, workers' compensation insurance of $100 per hour employee medical insurance of $4 per hour, and employer contributions to Social Security equal to 500 percent of direct labor wages. The cost of employee benefits paid by the company on its employees is treated as a direct labor cost Spirty Shades Corporation has a labor contract that calls for a wage increase to $19.00 per hour on April 120xt Management expects to have 33,200 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 April Direct-labor hours per unit 4.0 3.75 Wape per direct-labor hour $ 17.ee $ 17.00 $ 17.ee $ 19.00 $ 19.00 Estimated unit sales 2e,eee 22,00 18,00 19,000 19.000 Sales price per unit $ 60.00 $ 57.50 $ 57.50 $ 57.50 $ 57,50 Production overhead: Shipping and handling (per unit sold) $ 6.00 $ 6.00 $ 6,00 $6.00 $ 6.00 Purchasing, material handling, and inspection (per unit produced) $ 7.60 $ 7.00 $ 7.00 $ 7.00 $ 7.00 Other production overhead (per direct-Labor hour) $. le.ee $10.00 $ 10.00 $10.00 $10.00 > 4.0 3.75 3.25 Problem 9-31 Part 1 Required information Required: 1. Prepare a production budget and a direct-labor budget for Spiffy Shades Corporation by month and for the first quarter of 20x1 (Round "Direct-labor hours per unit" to 2 decimal places.) SPIFFY SHADES CORPORATION Budget for Production and Direct Labor For the First Quarter of 20x1 Month January February March Quarter Sales (units) Total needs 0 0 0 0 0 0 0 0 0 0 0 0 Units to be produced Direct-labor hours per unit Total hours of direct labor time needed Direct-labor costs: Wages Pension contributions Workers' compensation insurance Employee medical insurance Employer's social security Total direct-labor cost 0 $ 0 $ 0 $ 0 $ COP Next