Question

Ace Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for July for the two rackets is as follows:

Junior Pro Striker
Production budget 7,400 units 18,600 units

Both rackets are produced in two departments, Forming and Assembly. The direct labor hours required for each racket are estimated as follows:

Forming Department Assembly Department
Junior 0.2 hour per unit 0.4 hour per unit
Pro Striker 0.35 hour per unit 0.7 hour per unit

The direct labor rate for each department is as follows:

Forming Department $14 per hour
Assembly Department $12 per hour

Required:
Prepare the direct labor cost budget for July.

Answer 1

Answer and Explanation:

The preparation of the direct labor cost budget for July month is as follows:

Particulars Forming Dept Assembly Dept

Production 7,400 units 18,600 units

Hours required junior 1,480 2,960

(7,400 units × 0.2) (7,400 units × 0.4)

Hours required pro 6,510 13,020

(18,600 units × 0.35) (18,600 units × 0.7)

Total hours 7,990 15,980

Total hours rate $14 $12

Total direct labor cost $111,860 $191,760