Question

LHU Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.5 hours of direct labor at the rate of $15.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June.
The company plans to sell 38,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 600 and 100 units, respectively. Budgeted direct labor costs for June would be:

Answer 1

Answer:

$1,443,750

Explanation:

This can be calculated by following the steps below:

Step 1: Calculation of units of Product WZ produced in June

Unit produced = Budgeted opening inventory + Planned sales unit – Budgeted closing inventory

                          = 600 + 38,000 – 100

Unit produced = 38,500 units

Step 2: Calculation of Budgeted direct labor costs for June

Number of total number of direct labor hours required = 38,500 × 2.5 = 96,250 labour hours

Budgeted direct labor costs = (96,250 × $15) = $1,443,750

Therefore, budgeted direct labor costs for June would be $1,443,750.