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 201, Demarest has learned that new automated production equipment will be installed on March 1. This will reduce the direct labor per frame from 3.0 hours to 2.75 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 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 $12.00 per hour on April 1, 201. Management expects to have 17,500 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 50 percent of the second following month's sales. These and other data compiled by Demarest are summarized in the following table. Direct-labor hours per unit January 3.0 Wage per direct-labor hour $ 10.00 Estimated unit sales 11,000 Sales price per unit $ 64.00 February 3.0 $ 10.00 13,000 $ 61.50 March 2.75 $ 10.00 April May 2.75 $ 12.00 2.75 $ 12.00 9,000 10,000 $ 61.50 $ 61.50 10,000 $ 61.50 Production overhead: Shipping and handling (per unit sold) $ 2.00 $ 2.00 $ 2.00 $ 2.00 $ 2.00 Purchasing, material handling, and inspection (per unit produced) $ 3.00 $ 3.00 $ 3.00 $ 3.00 $ 3.00 Other production overhead (per direct labor hour) $ 6.00 $ 6.00 $ 6.00 $ 6.00 $ 6.00 Sales (units) Add: Ending inventory Total needs Less: Beginning inventory 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 SPIFFY SHADES CORPORATION Budget for Production and Direct Labor For the First Quarter of 20x1 Month January February March Quarter 11,000 13,000 9,000 33,000 17,500 28,500 13,000 9,000 33,000 17,500 11,000 11,000 2,000 9,000 33,000 0 0 0 0 $ 0 to SA $ 0 $ 0 $ 0