Question

Direct Labor Cost Budget Ace Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for July for the two rackets is as follows: Junior Pro Striker Production budget 1,500 units 6,200 units Both rackets are produced in two departments, Forming and Assembly. The direct labor hours required for each racket are estimated as follows:
Forming Department Assembly Department Junior 0.16 hour per unit 0.24 hour per unit
Pro Striker 0.20 hour per unit 0.30 hour per unit
The direct labor rate for each department is as follows:
Forming Department $18.00 per hour
Assembly Department $14.00 per hour
Required:
1. Prepare the direct labor cost budget for July 2016.

Answer 1

Answer:

The preparation of the direct labor budget is presented below:

Explanation:

The preparation of the direct labor budget is presented below:

                              Direct labor cost budget

                          For the month of July 2016

Particulars             Forming Department Assembly Department

Production             1,500 units                        6,200 units  

Hours required

Junior                    240                                   360

Hours Required

Pro                       1,240                                    1,860

Total Hours

Department wise (A)   1,480                              2,220

Total Hourly rate (B)    $18                              $14

Total Direct

Labor Cost (A × B)     $26,640                    $31,080

The computation is shown below:

For Junior, it would be

Forming = 0.16 × 1,500 = 240

Assembly = 0.24 × 1,500 = 360

For Pro, it would be

Forming = 0.20 × 6,200 = 1,240

Assembly = 0.30 × 6,200 = 1,860