Question

Mighty Corporation manufactures end tables. Each end table requires .50 direct labor hours in its production. Mighty Corporation has a direct labor rate of? $15 per direct labor hour. The production budget shows that Mighty Corporation plans to produce? 1,000 end tables in March and? 1,100 end tables in April. What is the total combined direct labor cost that Mighty Corporation should budget in March and? April?

Answer 1

The total combined direct labor cost that Mighty Corporation should budget in March and April is $15,750. The budgeted amount is calculated using the estimated labor hour to produce the product and the cost of labor hour. Mighty Company needs $7.5 ($15 x 0.5) of labor cost in order to create one end table. Mighty Company needs $7,500 of labor cost in order to produce 1,000 end tables in March and needs $8,250 of labor cost in order to produce 1,100 end tables in April.