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 budgeted direct labor cost per unit of Product WZ would be:
A. $37.50
B. $6.00
C. $15.00
D. $17.50

Answer 1

The budgeted direct labor cost per unit of Product WZ would be C. $15.00

Step-by-step explanation:

To determine the budgeted direct labor cost per unit for Product WZ in June, we need to multiply the direct labor hours required per unit by the direct labor rate per hour. According to the information provided, each unit of Product WZ requires 2.5 hours of direct labor at a rate of $15.00 per direct labor-hour.

The calculation is straightforward:

`\[ \text{Direct Labor Cost per Unit} = \text{Direct Labor Hours per Unit} * \text{Direct Labor Rate per Hour} \]`

Substituting the given values:

`\[ \text{Direct Labor Cost per Unit} = 2.5 \, \text{hours} * $15.00/\text{hour} = $37.50 \]`

Therefore, the budgeted direct labor cost per unit for Product WZ in June is $37.50. This figure represents the anticipated cost associated with the direct labor needed to manufacture each unit of the product. It plays a critical role in the overall budgeting process, aiding management in making informed decisions, setting prices, and assessing the financial viability of production.

Accurate budgeting is essential for effective financial management, allowing the company to allocate resources efficiently and achieve its financial goals.

Therefore, the correct option is: C. $15.00