Shady Shades, Inc., manufactures artistic frames for sunglasses. Talia Demarest, controller, is responsible for preparing the companys 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 5.0 hour to 4.75 hours. Labor-related costs include pension contributions of $1.30 per hour, workers' compensation insurance of $1.00 per hour, employee medical insurance of $4 per hour, and employer contributions to Social Security equal to 6.00 percent of direct-labor wages. The cost of employee benefits paid by the company on its employees is treated as a direct-labor cost. Shady Shades, Inc., has a labor contract that calls for a wage increase to $15.00 per hour on April 1, 20x1. Management expects to have 17,200 frames on hand at December 31, 20x0, and has a policy of carrying an end-of-month inventory of 100 percent of the following months sales plus 60 percent of the second following months sales. These and other data compiled by Demarest are summarized in the following table.

These and other data compiled by Demarest are summarized in the following table.

January

February

March

April

May

Direct-labor hours per unit

5.0

5.0

4.75

4.75

4.75

Wage per direct-labor hour

$

13.00

$

13.00

$

13.00

$

15.00

$

15.00

Estimated unit sales

10,000

12,000

8,000

9,000

9,000

Sales price per unit

$

54.00

$

51.50

$

51.50

$

51.50

$

51.50

Production overhead:

Shipping and handling (per unit sold)

$

4.00

$

4.00

$

4.00

$

4.00

$

4.00

Purchasing, material handling,

and inspection (per unit produced)

$

5.00

$

5.00

$

5.00

$

5.00

$

5.00

Other production overhead

(per direct-labor hour)

$

10.00

$

10.00

$

10.00

$

10.00

$

10.00

PLEASE ASSIST WITH ANSWERING THE QUESTION BELOW.

Prepare a production budget and a direct-labor budget for Shady Shades, Inc., by month and in total for the first quarter of 20x1.

SHADY SHADES, INC.
Budget for Production and Direct Labor
For the First Quarter of 20x1
	Month
	January	February	March	Quarter
Sales (units)	10,000	12,000	8,000	30,000
Add: Ending inventory
Total needs	10,000	12,000	8,000	30,000
Less: Beginning inventory
Units to be produced	10,000	12,000	8,000	30,000
Direct-labor hours per unit
Total hours of direct labor time needed	0	0	0	0
Direct-labor costs:
Wages
Pension contributions
Workers' compensation insurance
Employee medical insurance
Employer's social security
Total direct-labor cost	$0	$0	$0	$0