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Spitty Shades Corporation manufactures art stic frames for sung asses. Talia Demarest, controller, Is responsible for preparing the company's master budget. In compiling the budget
Spitty Shades Corporation manufactures art stic frames for sung asses. Talia 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 il 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 Soclal Security equal to 7.00 percent of direct-labor wages. The cost of employee benefits paid by the company on its employees is treated as a direct-labor cost. Spifty Shades Corporation has a labor contract that calls for a wage Increase to $20.00 per hour on April 1, 20x1. Management expects to have 23,500 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 montn's sales. These and other data compiled by Demarest are summarized in the tollowing table. Direct-labor hours per unit Wage per direct-labor hour E timated unit alles Sales price per unit 62.00 59.50 59.5059.50 59.50 Production overhead: 3.0 3.0 2-75 2-75 2-75 $ 18.00 18.00 18.00 20.00 20.00 15,000 17,000 13,000 14,000 14,00 shipping and handling (per unit sold) Purchasing, material $4.004.00 4.00 4.00 4.00 handling, and inspection (per unit $ 5.00 5.00 5.00 5.00 5.00 Other production overhead (per direct-$ 6.00 $ 6.00 6.00 6.00 $ 6.00 labor hour) Required: 1 Prepare a production budget and a direct-labor budget for Spitty Shades C by month and for the first quarter of 20x1. Round "Direct-labor hours per unit" to 2 decimal places.) SHADES C Budget for Production and Direct Labor For the First Quarter of 20x1 Month Sales (units) Total needs 15,000 17,00013,000 15,000 17,00013,000 Units to be produced Direct-labor hours per unit Total hours of direct labor time needed Direct-labor costs: Workers' compensation Employee medical Employer's social security
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