Ruyue HongACC 312: Introduction to ManagerialAccounting: Fall 2015 – MW – LendeckyDue for Class 18 – October 26instructions | helpProblem 9-32 Production and Direct-Labor Budgets; Activity-Based Overhead Budget (LO 9-3, 94, 9-5, 9-6)Shady Shades, Inc., manufactures artistic frames for sunglasses. Talia Demarest, controller, is responsible forpreparing the company’s master budget. In compiling the budget data for 20×1, Demarest has learned thatnew automated production equipment will be installed on March 1. This will reduce the direct labor per framefrom 5.0 hour 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 Securityequal to 4.00 percent of direct-labor wages. The cost of employee benefits paid by the company on itsemployees is treated as a direct-labor cost. Shady Shades, Inc., has a labor contract that calls for a wageincrease to $13.00 per hour on April 1, 20×1. Management expects to have 16,000 frames on hand atDecember 31, 20×0, and has a policy of carrying an end-of-month inventory of 100 percent of the followingmonth’s sales plus 50 percent of the second following month’s sales.These and other data compiled by Demarest are summarized in the following table.Direct-labor hours per unitWage per direct-labor hourEstimated unit salesSales price per unitProduction overhead:Shipping and handling (per unit sold)Purchasing, material handling,and inspection (per unit produced)Other production overhead(per direct-labor hour)January5.0$ 11.0010,000$ 56.00February5.0$ 11.0012,000$ 53.50March4.75$ 11.008,000$ 53.50April4.75$ 13.009,000$53.50May4.75$ 13.009,000$53.50$6.00$6.00$ 6.00$ 6.00$ 6.00$7.00$7.00$ 7.00$ 7.00$ 7.00$5.00$5.00$ 5.00$ 5.00$ 5.00ReferencesSection Break2.value:1.00 pointsProblem 9-32 Production andDirect-Labor Budgets;Activity-Based OverheadBudget (LO 9-3, 9-4, 9-5, 9-6)You did not receive credit for this question in a previous attemptProblem 9-32 Part 1Required:1. Prepare a production budget and a direct-labor budget for Shady Shades, Inc., by month and in total forthe first quarter of 20×1.Required informationrev: 11_17_2014_QC_59055ReferenceseBook & ResourcesProblemProblem 9-32 Part 1Learning Objective: 09-04Explain the concept ofactivity-based budgeting andthe logic it brings to thebudgeting process.Difficulty: Hard3.Learning Objective: 09-03Describe the similarities anddifferences in the operationalbudgets prepared bymanufacturers, serviceindustry firms,merchandisers, andnonprofit organizations.Learning Objective: 09-05Prepare each of the budgetschedules that make up themaster budget in anonmanufacturing firm, andthat exist in manufacturingbudgets as well.value:1.00 pointsLearning Objective: 09-06 Prepare the additional masterbudget schedules required by a manufacturing firm.You did not receive credit for this question in a previous attemptProblem 9-32 Part 22. For each item used in the firm’s production budget and direct-labor budget, select the other componentsof the master budget (except for financial statement budgets) that also, directly or indirectly, would useRequired informationthese data. (Select all that apply.)a. Sales data:b. Production data:c. Direct-labor-hour data:d.Direct-labor cost data:ReferenceseBook & ResourcesProblemProblem 9-32 Part 2Learning Objective: 09-04Explain the concept ofactivity-based budgeting andthe logic it brings to thebudgeting process.Difficulty: Hard4.Learning Objective: 09-03Describe the similarities anddifferences in the operationalbudgets prepared bymanufacturers, serviceindustry firms,merchandisers, andnonprofit organizations.Learning Objective: 09-05Prepare each of the budgetschedules that make up themaster budget in anonmanufacturing firm, andthat exist in manufacturingbudgets as well.value:1.00 pointsLearning Objective: 09-06 Prepare the additional masterbudget schedules required by a manufacturing firm.You did not receive credit for this question in a previous attemptProblem 9-32 Part 33. Prepare a production-overhead budget for each month and for the first quarter.Required informationReferenceseBook & ResourcesProblemLearning Objective: 09-03Describe the similarities anddifferences in the operationalbudgets prepared bymanufacturers, serviceindustry firms,merchandisers, andnonprofit organizations.Problem 9-32 Part 3Learning Objective: 09-04Explain the concept ofactivity-based budgeting andthe logic it brings to thebudgeting process.Difficulty: HardLearning Objective: 09-06 Prepare the additional masterbudget schedules required by a manufacturing firm.Learning Objective: 09-05Prepare each of the budgetschedules that make up themaster budget in anonmanufacturing firm, andthat exist in manufacturingbudgets as well.©2015 McGraw-Hill Education. All rights reserved.2015