Question

Whitman has a direct labor standard of 2 hours per unit of output. Each employee has a standard wage rate of $23.50 per hour. During July, Whitman paid $105,328 to employees for 4640 hours worked. 2570 units were produced during July. What is the flexible budget amount for direct labor?

a. 120790
b. 202618
c. 218080
d. 226118

Answer 1

The flexible budget amount for direct labor is a. $120,790.

Step-by-step explanation:

To calculate the flexible budget amount for direct labor, we need to determine the number of hours worked based on the standard labor rate and the actual number of units produced. The standard labor rate is $23.50 per hour and the standard labor time per unit is 2 hours.

First, we can calculate the standard labor cost per unit: $23.50/hr * 2 hrs = $47.

Then, we can calculate the flexible budget amount for direct labor by multiplying the standard labor cost per unit by the actual number of units produced: $47/unit * 2570 units = $120,790.

Therefore, the flexible budget amount for direct labor is $120,790 which corresponds to option a.