Question

LBC Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 3.0 hours of direct labor at the rate of $26.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June. The company plans to sell 49,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 610 and 170 units, respectively. Budgeted direct labor costs for June would be:

Answer 1

The Budgeted direct labor costs for June would be $1,262,560

Step-by-step explanation:

For computing the direct labor cost, first we have to calculate how many units of production is used. The equation is shown below :

Total Production Units = Ending finished goods inventories + sales units - opening finished goods inventories

= 170 + 49,000 - 610

= 48,560 units

Now, multiply these units with direct labor hour rate which equals to

= Units produced × direct labor hour rate

= 48,560 × $26.00

= $1,262,560

Thus, Budgeted direct labor costs for June would be $1,262,560