Final answer:
To calculate the direct labor budget, the number of units to be produced for products Better and Best is determined first. Then the total hours and cost of molding and polishing are calculated for each product, resulting in a total direct labor cost of $1,819,000.
Step-by-step explanation:
To prepare a direct labor budget in hours and dollars for each product, Waikaloa Manufacturing must first calculate how many units they need to produce, considering their expected sales and desired ending inventory levels.
For the product Better, Waikaloa expects to sell 20,000 units and wants an ending inventory of 4,000 units. Given that there are already 1,000 units in the beginning inventory, they need to produce 23,000 units (20,000 units to be sold + 4,000 units for the ending inventory - 1,000 units in beginning inventory).
For the product Best, Waikaloa expects to sell 10,000 units and wants an ending inventory of 2,000 units. With 800 units in the beginning inventory, they need to produce 11,200 units (10,000 units to be sold + 2,000 units for the ending inventory - 800 units in beginning inventory).
Product Better requires 1 hour of molding and 1 hour of polishing per unit. Thus, for the 23,000 units needed, Waikaloa will require 23,000 hours of molding and 23,000 hours of polishing. At $20 per hour for molding and $25 per hour for polishing, the labor costs will be $460,000 for molding (23,000 hours * $20/hour) and $575,000 for polishing (23,000 hours * $25/hour).
Product Best requires 1 hour of molding and 2 hours of polishing per unit. This means 11,200 hours of molding and 22,400 hours of polishing are needed. The labor costs for Best will be $224,000 for molding (11,200 hours * $20/hour) and $560,000 for polishing (22,400 hours * $25/hour).
In total, the direct labor budget for both products will be $1,819,000.