Question

Webster Corporation is preparing a master budget for the first quarter of the year. The company budgets production of 2,680 units in January, 2,600 units in February and 2,740 units in March. Each unit requires 0.6 hours of direct labor. The direct labor rate is $12 per hour. Compute the budgeted direct labor cost for the first quarter budget.

Answer 1

Answer:

The budget direct labor cost for the first quarter of the year is $57,774

Explanation:

Units per month:

January = 2,680

February = 2,600

March = 2,740

Total of units first quarter of year = 2,680+2,600+2,740= 8,020

So, "Each unit requires 0.6 hours of direct labor"

We need to multiply the units by the hours of direct labor

*why ?

Rule of three

1 unit need --------- 0.6 hours direct labor

8,020---------------- ?

= (8,020 x 0.6) / 1

= 4,812 / 1

= 4,812 hours we need to produce the total units

Finally: we need to multiply the hours by the payment per hour, or direct labor rate that is $12

4,812 x $12= $57,774 is the budget direct labor cost for the first quarter of the year.