Question

During the first month of the year, the Boise plant produced 92,000 belts. Actual leather purchased was 287,500 strips at $3.60 per strip. There were no beginning or ending inventories of leather. Actual direct labor was 78,200 hours at $12.50 per hour. Required: 1. Compute the costs of leather and direct labor that should be incurred for the production of 92,000 leather belts.

Answer 1

Answer:

1. Cost of Leather

Leather strips cost $12 as a standard for labor.

Cost of Leather = $12 * quantity

Cost of Leather = $12 * 92,000

= $1,104,000

2. DIrect Labor Cost

Costs $9 per the amount of time it takes to produce the belts.

Labor Cost = 9 * 92,000

Labor Cost = $828,000