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earnstyle [38]
2 years ago
11

Crane, Inc., is preparing its direct labor budget for 2020 from the following production budget based on a calendar year.

Business
1 answer:
skelet666 [1.2K]2 years ago
7 0

Answer:

Total labor hour = Units*Operating hours

Labor cost= Total labor hours * Hourly wage rate

                                                                QUARTER

                                                  1             2              3             4

Units                                     20,330   35,270    25,370    30,390

DLH time per unit                   1.70        1.70          1.70        1.70

Total labour hours need      34561     43129     59959     51663

Hourly wage rate                      17          17              19            19

Budgeted direct labor hour 587535  733193   1138221   981597

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Answer:

Creamy Crisp's total revenues exceed its total costs, including a normal profit, by $366,000

Explanation:

Creamy Crisp's total revenue exceeds its total cost, including a normal profit by =

When answering this we use all the actual costs and revenue and all the hypothetical figures, or the opportunity costs and revenue as we need to calculate total revenue exceeding costs and normal profits.

Total revenue actual + potential = Entrepreneur's potential earnings as a salaried worker $50,000 + Annual revenue from operations $380,000 + Value of entrepreneur's talent in the next best entrepreneurial activity $80,000 + Entrepreneur's forgone interest on personal funds used to finance the business $6,000

= $516,000

Total costs = Payments to workers $120,000 + Utilities (electricity, water, disposal) costs $8,000 + Annual lease on building = $22,000

= $150,000

Creamy Crisp's total revenues exceed its total costs including a normal profit by $516,000 - $150,000 = $366,000

Since normal profit is included and not excluded normal profit shall not be computed separately and the final answer is $366,000

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