Question

The budgeted production of​ taurus, inc. is 12,000 units per month. each unit requires 30 minutes of direct labor to complete. the direct labor rate is $90 per hour. calculate the budgeted cost of direct labor for the month.​ (round any intermediate calculations to the nearest cent and your final answer to the nearest​ dollar.)

Answer 1

The correct answer is $540,000.

In order to calculate the budgeted cost of direct labor for the month you must first calculate the amount of labor that is required.

In this example there are 12,000 unites being produced and each unit requires 30 minutes of labor. The total amount of labor is 12,000 x .5 hours = 6,000 hours of labor.

The cost of the labor is $90 per hour, so the cost of the budgeted labor is $90 x 6,000 hours, which is a total of $540,000. The total budgeted cost of direct labor for the month is $540,000.