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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, 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 $1.55 per hour, workers' compensation insurance of $1.25 per hour, employee medical insurance of $5 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. Spiffy Shades Corporation has a labor contract that calls for a wage increase to $21.00 per hour on April 1, 20x1. Management expects to have 22,000 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. January February March 2.75 $ 19.00 12,000 $ 61.50 Direct-labor hours per unit Wage per direct-labor hour Estimated unit sales Sales price per unit Production overhead: Shipping and hand ling (per unit sold) Purchasing, material handling, and inspection (per unit produced) Other production overhead (per direct-labor hour) April 2.75 $ 21.00 13,000 $ 61.50 Мay 2.75 $ 21.00 13,000 $ 61.50 3.0 3.0 $ 19.00 $ 19.00 14, e00 16,000 $ 64.00 $ 61.50 $ 4.e0 $ 4.00 $ 4.00 $ 4.00 $ 4.00 $5.00 $ 5.00 $ 5.00 $ 5.00 $ 5.00 $ 7.00 $ 7.00 7.00 $ 7.00 $ 7.00

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, 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 $1.55 per hour, workers' compensation insurance of $1.25 per hour, employee medical insurance of $5 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. Spiffy Shades Corporation has a labor contract that calls for a wage increase to $21.00 per hour on April 1, 20x1. Management expects to have 22,000 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. January February March 2.75 $ 19.00 12,000 $ 61.50 Direct-labor hours per unit Wage per direct-labor hour Estimated unit sales Sales price per unit Production overhead: Shipping and hand ling (per unit sold) Purchasing, material handling, and inspection (per unit produced) Other production overhead (per direct-labor hour) April 2.75 $ 21.00 13,000 $ 61.50 Мay 2.75 $ 21.00 13,000 $ 61.50 3.0 3.0 $ 19.00 $ 19.00 14, e00 16,000 $ 64.00 $ 61.50 $ 4.e0 $ 4.00 $ 4.00 $ 4.00 $ 4.00 $5.00 $ 5.00 $ 5.00 $ 5.00 $ 5.00 $ 7.00 $ 7.00 7.00 $ 7.00 $ 7.00

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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, 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 $1.55 per hour, workers' compensation insurance of $1.25 per hour, employee medical insurance of $5 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. Spiffy Shades Corporation has a labor contract that calls for a wage increase to $21.00 per hour on April 1, 20x1. Management expects to have 22,000 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. January 3.0 $ 19.00 14, e00 $ 64.00 February 3.0 $ 19.00 16,000 $ 61.50 March 2.75 $ 19.00 12,000 $ 61.50 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) April 2.75 $ 21.00 13,000 $ 61.50 May 2.75 $ 21.00 13,000 $ 61.50 $4 $ 4.00 $ 4.00 $ 4.00 $ 4.00 $ 4.00 $ 5.00 $ 5.00 $ 5.00 $ 5.00 $ 5.00 $ 7.00 $ 7.00 $ 7.00 $ 7.00 %24 7.00 Problem 9-31 Part 1 8. < Prev 4 5. of 5 Next > N0 ET R OP V. N4 38 commanc
Transcribed Image Text: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, 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 $1.55 per hour, workers' compensation insurance of $1.25 per hour, employee medical insurance of $5 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. Spiffy Shades Corporation has a labor contract that calls for a wage increase to $21.00 per hour on April 1, 20x1. Management expects to have 22,000 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. January 3.0 $ 19.00 14, e00 $ 64.00 February 3.0 $ 19.00 16,000 $ 61.50 March 2.75 $ 19.00 12,000 $ 61.50 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) April 2.75 $ 21.00 13,000 $ 61.50 May 2.75 $ 21.00 13,000 $ 61.50 $4 $ 4.00 $ 4.00 $ 4.00 $ 4.00 $ 4.00 $ 5.00 $ 5.00 $ 5.00 $ 5.00 $ 5.00 $ 7.00 $ 7.00 $ 7.00 $ 7.00 %24 7.00 Problem 9-31 Part 1 8. < Prev 4 5. of 5 Next > N0 ET R OP V. N4 38 commanc
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 March Quarter Shipping and handling Purchasing, material handling, and inspection Other overhead Total production overhead %24 < Prev 5 of 5 Next > 5. 6 E Y. D F H. C V N M. CO
Transcribed Image Text: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 March Quarter Shipping and handling Purchasing, material handling, and inspection Other overhead Total production overhead %24 < Prev 5 of 5 Next > 5. 6 E Y. D F H. C V N M. CO
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