Required Information [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, Demorest has learned that new automated production equipment will be installed on March 1. This will reduce the direct labor per freme from 1.0 hour to 0.75 hour. Labor-related costs include pension contributions of $0.80 per hour, workers' compensation insurance of $0.50 per hour, employee medical insurance of $2 per hour, and employer contributions to Social Security equal to 4.00 percent of direct- labor wages. The cost of employee benefits paid by the company on its employees is treated as a direct-labor cost. Spiffy Shades Corporation has a labor contract that calls for a wage increase to $13.00 per hour on April 1, 20x1. Management expects to have 23.200 frames on hand st December 31, 20x0, and hos e policy of carrying an end-of-month inventory of 100 percent of the following month's sales plus 40 percent of the second following month's soles. These and other date compiled by Demarestere summarized in the following table. January February March April May Direct labor hours per unit 1.0 1.a 8.75 @.75 8.75 Wage per direct labor hour $ 11.20 $ 11.99 $ 11.se $ 13.00 $ 13.00 Estimated unit sales 16,00 19.ee 14,828 15,220 15.ee Sales price per unit $ 62.00 $ 59.5a $ 59.50 $59.50 $ 59.se Production overhead: Shipping and handling (per unit sold) $ 5.ee 5.89 $ 5.20 $ 5.ee $ 5.00 Purchasing, material handling, and inspection (per unit produced) 6.89 $6.00 $ 6.00 Other production overhead (per direct labor hour) $ 8.00 $ 8.00 $ 8.se 8.00 $ 8.00 $ $ $ $ $ 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 16.000 18,000 Quarter March 14,000 Sales (units) Add: Ending inventory Total needs 16.000 18,000 14,000 16.000 18,000 14,000 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-labar cost $ S ols 01 S Required Information [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 1.0 hour to 0.75 hour. Labor-related costs Include pension contributions of $0.80 per hour, workers' compensation Insurance of $0.50 per hour, employee medical Insurance of $2 per hour, and employer contributions to Social Security equal to 4.00 percent of direct- labor wages. The cost of employee benefits paid by the company on its employees is treated as a direct-labor cost. Spiffy Shades Corporation has a labor contract that calls for a wage increase to $13.00 per hour on April 1, 20x1. Management expects to have 23,200 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 40 percent of the second following month's sales. These and other data compiled by Demarest are summarized in the following table. January 1.0 $ 11.00 16,000 $ 62.00 February 1.e $ 11.ee 18, eee $ 59.50 March 0.75 $ 11.00 14,000 $ 59.50 April 0.75 $ 13.ee 15, eee $ 59.50 May 0.75 $ 13.00 15,000 $ 59.50 Direct-labor hours per unit wage per direct-labor hour Estimated unit sales Sales price per unit Production overhead: Shipping and handling (per unit sold) Purchasing, material handling, and inspection (per unit produced) other production overhead (per direct-labor hour) $ 5.00 $ 5.ee $ 5.00 $ 5.ee $ 5.00 $ 6.00 $ 6.ee $ 6.00 $ 6.00 $ 6.00 $ 8.00 $ .ee $ $ 8.00 3. Prepare a production overhead budget for each month and for the first quarter. SPIFFY SHADES CORPORATION Production Overhead Budget For the First Quarter of 20x1 Month January February Shipping and handling S 16.000 S 18,000 $ Purchasing, material handling, and inspection Other overhead Total production overhead S 16,008 S 18,008 Quarter March 14,000 $ 15 8 8 8 S 14.008 $ 15