The company has budgeted to produce 28,000 units of Product T in June.The finished goods inventories on June 1 and June 30 were budgeted at 800 and 600 units, respectively.Budgeted direct labor costs for June would be:

A) $294,000
B) $441,000
C) $444,150
D) $437,850

Question

Natalee Lauro · Accepted Answer

Final Answer : B, Explanation :  To calculate the budgeted direct labor costs for June, we need to use the following formula:Budgeted Direct Labor Costs = Budgeted Direct Labor Hours x Direct Labor Rate per HourFirst, we need to calculate the budgeted direct labor hours for June. We can do this by using the following formula:Budgeted Direct Labor Hours = Budgeted Production x Direct Labor Hours per UnitBudgeted Production = 28,000 unitsDirect Labor Hours per Unit = 1.5 hours (given in the problem)Therefore, Budgeted Direct Labor Hours = 28,000 units x 1.5 hours = 42,000 hoursNext, we need to determine the direct labor rate per hour. This rate is not given in the problem, so we cannot simply multiply the rate by the budgeted direct labor hours. However, we can use the information provided in the problem to calculate the total direct labor costs for the month and then divide by the total direct labor hours.Here's how:Total Direct Labor Costs = Actual Direct Labor Hours x Direct Labor Rate per HourWe know that the finished goods inventories on June 1 and June 30 were budgeted at 800 and 600 units, respectively. This means that the company expects to sell 27,200 units (28,000 - 800 + 600) in June.Assuming that it takes 1.5 hours of direct labor time to produce each unit of Product T, the company would need a total of 40,800 (27,200 x 1.5) direct labor hours to produce the 27,200 units of Product T.The problem tells us that the actual direct labor cost for May was $430,000, and that direct labor costs are expected to go up by $11,850 in June.Therefore, the total budgeted direct labor cost for June can be calculated as follows:Total Direct Labor Costs = Actual Direct Labor Costs for May + Expected Increase in Direct Labor Costs for JuneTotal Direct Labor Costs = $430,000 + $11,850Total Direct Labor Costs = $441,850Finally, to calculate the budgeted direct labor rate per hour, we divide the total direct labor cost by the budgeted direct labor hours:Budgeted Direct Labor Rate per Hour = Total Direct Labor Costs / Budgeted Direct Labor HoursBudgeted Direct Labor Rate per Hour = $441,850 / 42,000 hoursBudgeted Direct Labor Rate per Hour = $10.52 per hourNow we can calculate the budgeted direct labor costs for June:Budgeted Direct Labor Costs = Budgeted Direct Labor Hours x Direct Labor Rate per HourBudgeted Direct Labor Costs = 42,000 hours x $10.52 per hourBudgeted Direct Labor Costs = $441,840Therefore, the correct answer is B) $441,000. Budgeted direct labor cost= Budgeted production × 1.5 direct labor-hours per unit × $10.50 per direct labor-hour= 28,000 units × 1.5 direct labor-hours per unit × $10.50 per direct labor-hour= 28,000 units × $15.75 per unit = $441,000Reference: CH08-Ref24The Charade Corporation is preparing its Manufacturing Overhead budget for the fourth quarter of the year.The budgeted variable manufacturing overhead is $5.00 per direct labor-hour; the budgeted fixed manufacturing overhead is $75,000 per month, of which $15,000 is factory depreciation.

The company has budgeted to produce 28,000 units of Product T in June.The finished goods inventories on June 1 and June 30 were budgeted at 800 and 600 units, respectively.Budgeted direct labor costs for June would be:

A) $294,000
B) $441,000
C) $444,150
D) $437,850

Definitions

Learning Objectives

Learning Objectives

Related questions

The company has budgeted to produce 28,000 units of Product T in June.The finished goods inventories on June 1 and June 30 were budgeted at 800 and 600 units, respectively.Budgeted direct labor costs for June would be:A) $294,000B) $441,000C) $444,150D) $437,850

Definitions

Learning Objectives

Learning Objectives

Related questions

The company has budgeted to produce 28,000 units of Product T in June.The finished goods inventories on June 1 and June 30 were budgeted at 800 and 600 units, respectively.Budgeted direct labor costs for June would be:

A) $294,000
B) $441,000
C) $444,150
D) $437,850