Question

Pewabic plans to sell 900 boxes of art tile in April, and estimates they'll craft 870 boxes during the month. Each box of tile requires 44 pounds of clay and a quarter hour of direct labor. Clay costs $0.40 per pound and pottery artisans are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Pewabic has 3,900 pounds of clay in beginning inventory on April 1 and wants to have 4,500 pounds in ending inventory on April 30. What total amount should Pewabic budget for direct labor for the of April

Answer 1

Direct labour cost budget= $2,610

Step-by-step explanation:

The direct labor cost budget is a function of the production product budget. The quantity of the product budgeted to be produced would determine the labor cost budget.

Direct labour budget = Production budget × standard hours × standard labour rate per hour

Standard hour = a quarter direct labour = 1/4 hour

Direct labour budget = 870 × 0.1× $12= $2610

Direct labour cost budget= $2,610