Question

Davidson Corporation’s master budget shows expected direct labor cost of $90,000 for the month of May. During May, the company’s expected sales equal 12,000 units and expected production is 15,000 units. If each unit requires 1/2 hour of direct labor, the budgeted direct labor rate is $ __________per hour.

Answer 1

The budgeted direct labor rate at Davidson Corporation is calculated as $12 per hour, based on a total direct labor cost of $90,000 and production of 15,000 units, with each requiring 0.5 hours of direct labor.

Step-by-step explanation:

The question concerns the calculation of the budgeted direct labor rate at Davidson Corporation based on the given master budget and expected unit labor requirements. By interpreting the provided data, the total expected direct labor cost for the month of May is $90,000, and the company plans to produce 15,000 units, with each unit necessitating 0.5 hours of direct labor. To find the budgeted direct labor rate per hour, we need to calculate the total direct labor hours first and then divide the total direct labor cost by the total labor hours.

Total direct labor hours for May = 15,000 units × 0.5 hours/unit = 7,500 hours.

Budgeted direct labor rate = Total direct labor cost / Total direct labor hours

Budgeted direct labor rate = $90,000 / 7,500 hours = $12 per hour.

Answer 2

Answer: 12%

Step-by-step explanation:

Given the following ;

Expected direct labor cost=$90000

Expected production = 15000 units.

Production time per unit of direct labor 0.5 hours

Therefore, total direct labor required to produce 15,000 units

Total direct labor hour = 15,000 × 0.5 = 7500 labor hours.

Therefore, Budgeted direct labor rate % is given by;

Expected direct labor cost ÷ Total direct labor(hour)

$90,000 ÷ 7500 = 12%