Question

Combs Co. is planning to sell 400 hair dryers and produce 380 hair dryers during March. Combs uses 500 grams of plastic and one-half hour of direct labor to produce one hair dryer. Plastic costs $10 per 100 grams and employees of the company are paid $15 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Combs Co. has 300 kilos of plastic in beginning inventory and wants to have 200 kilos in ending inventory. How much is the total amount of budgeted direct labor for March?

a. $2,800
b. $5,600
c. $2,660
d. $5,320

Answer 1

Budgeted labour cost =$8,550

Step-by-step explanation:

Labour budgeted is prepared using the production budget data. This is simply because the budgeted labour hour is a function of the budgeted production units.

Budgeted labour hours = Production budget × standard hours per unit

= 380 × 1.5 hours=570

Budgeted labour cost= Budgeted labour hours × Standard labour rate

= 570 hours × $15 =$8550

Budgeted labour cost =$8,550