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 $0.55 per hour, workers' compensation insurance of $0.25 per hour, employee medical insurance of $1 per hour, and employer contributions to Social 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. Spiffy Shades Corporation has a labor contract that calls for a wage increase to $17.00 per hour on April 1, 20x1. Management expects to have 20,100 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 30 percent of the second following month's sales. These and other data compiled by Demarest are summarized in the following table.
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 $0.55 per hour, workers' compensation insurance of $0.25 per hour, employee medical insurance of $1 per hour, and employer contributions to Social 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. Spiffy Shades Corporation has a labor contract that calls for a wage increase to $17.00 per hour on April 1, 20x1. Management expects to have 20,100 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 30 percent of the second following month's sales. These and other data compiled by Demarest are summarized in the following table.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
![Line Tollowing information applies to the questions displayed below.j
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 $0.55 per hour, workers' compensation
insurance of $0.25 per hour, employee medical insurance of $1 per hour, and employer
contributions to Social 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. Spiffy Shades
Corporation has a labor contract that calls for a wage increase to $17.00 per hour on April 1, 20x1.
Management expects to have 20,100 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 30 percent
of the second following month's sales.
These and other data compiled by Demarest are summarized in the following table.
January
3.0
$15.00
15,000
February
3.0
$ 15.00
17,000
$61.50
$ 64.00
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)
S
$5.00
$ 6.00
$ 6.00
▬▬
$ 5.00
$ 6.00
$ 6.00
March
2.75
$ 15.00
13,000
$ 61.50
$ 5.00
6.00
$
$ 6.00
April
2.75
$ 17.00
14,000
$61.50
$ 5.00
$ 6.00
$ 6.00
May
2.75
$ 17.00
14,000
$61.50
5.00
$
$ 6.00
$
6.00](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9ac60d12-461f-4705-85ea-fb73bb175231%2Fcd4f8694-7bb3-492b-b698-682d6a6e9ec1%2Fgypuxm_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Line Tollowing information applies to the questions displayed below.j
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 $0.55 per hour, workers' compensation
insurance of $0.25 per hour, employee medical insurance of $1 per hour, and employer
contributions to Social 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. Spiffy Shades
Corporation has a labor contract that calls for a wage increase to $17.00 per hour on April 1, 20x1.
Management expects to have 20,100 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 30 percent
of the second following month's sales.
These and other data compiled by Demarest are summarized in the following table.
January
3.0
$15.00
15,000
February
3.0
$ 15.00
17,000
$61.50
$ 64.00
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)
S
$5.00
$ 6.00
$ 6.00
▬▬
$ 5.00
$ 6.00
$ 6.00
March
2.75
$ 15.00
13,000
$ 61.50
$ 5.00
6.00
$
$ 6.00
April
2.75
$ 17.00
14,000
$61.50
$ 5.00
$ 6.00
$ 6.00
May
2.75
$ 17.00
14,000
$61.50
5.00
$
$ 6.00
$
6.00
![Problem 9-31 Part 3
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
Shipping and handling
Purchasing, material handling, and inspection
Other overhead
Total production overhead
< Prev
$
January
0 $
S
6 of 6
Month
February
‒‒‒
▬▬▬
0 $
March
Next >
0 $
Quarter
C
C](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F9ac60d12-461f-4705-85ea-fb73bb175231%2Fcd4f8694-7bb3-492b-b698-682d6a6e9ec1%2Fkkjpwlh_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Problem 9-31 Part 3
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
Shipping and handling
Purchasing, material handling, and inspection
Other overhead
Total production overhead
< Prev
$
January
0 $
S
6 of 6
Month
February
‒‒‒
▬▬▬
0 $
March
Next >
0 $
Quarter
C
C
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