Question

Marigold Corp. is preparing its direct labor budget for May. Projections for the month are that 30800 units are to be produced and that direct labor time is three hours per unit. If the labor cost per hour is $15, what is the total budgeted direct labor cost for May?

Answer 1

Total direct labour hours = 30,800 x 3hrs

= 92,400hrs

Total budgeted direct labour cost = 92,400 x $15

= $1,386,000

Explanation: The production budget is 30,800 units. There is need to multiply the production budget by the labour hours required per unit.

Thereafter, we will multiply the total direct labour hours by direct labour cost per unit so as to obtain total budgeted direct labour cost.