Question

Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.15 direct labor-hours. The direct labor rate is $7.00 per direct labor-hour. The production budget calls for producing 6,500 units in April and 6,200 units in May. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 1,000 hours in total each month even if there is not enough work to keep them busy. What would be the total combined direct labor cost for the two months

Answer 1

Direct labor budget:

April= $7,000

May= $7,000

Step-by-step explanation:

Giving the following information:

Each unit of output requires 0.15 direct labor-hours.

The direct labor rate is $7.00 per direct labor-hour.

The production budget calls for producing 6,500 units in April and 6,200 units in May.

The company is committed to paying for at least 1,000 hours each month.

First, we need to determine the number of hours for each month:

April= 6,500*0.15 hours= 975

May= 6,200*0.15= 930 hours

Direct labor budget:

April= 1,000 hours*7= $7,000

May= 1,000 hours*7= $7,000