Question

TB MC Qu. 8-174 LBC Corporation makes and sells ... LBC Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.0 hours of direct labor at the rate of $16.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June. The company plans to sell 39,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 610 and 110 units, respectively. Budgeted direct labor costs for June would be:

Answer 1

Answer:

Direct labor cost= $1,232,000

Explanation:

Giving the following information:

Each unit of Product WZ requires 2 hours of direct labor at a rate of $16 per direct labor-hour.

Sales= 39,000 units

Beginning inventory= 610 units

Desired ending inventory= 110 units

First, we need to calculate the production required:

Production= sales + desired ending inventory - beginning inventory

Production= 39,000 + 110 - 610

Production= 38,500

Now, the direct labor budget:

Direct labor hours= 38,500*2= 77,000 hours

Direct labor cost= 77,000*16= $1,232,000