Spifty Shades Corporation manufactures artistic frames for sunglasses. Talla Demarest, controller, is responsibie 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 5.0 hours 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 8.00 percent of directlabor 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 $19.00 per hour on April 1, 20x1. Management expects to have 20,400 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 40 percent of the second following month's sales. These and other data complled by Demarest are summarized in the following table. Problem 931 Part 1 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.)