Question

The budgeted production of Capricorn, Inc. is 10,000 units per month. Each unit requires 20 minutes of direct labor to complete. The direct labor rate is $100 per hour. Calculate the budgeted cost of direct labor for the month. (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.)

Answer 1

The budgeted cost of direct labor for the month is $333,333.

Step-by-step explanation:

This question can be solved using rules of three.

The direct labor rate is $100 per hour.

Each unit requires 20 minutes of direct labor to complete.

An hour has 60 minutes, so in an hour, 60/20 = 3 units can be made.

This means that the cost of 3 units is $100.

10,000 units per month.

How much do 10,000 units cost?

3 units - 100

10,000 units - $x

`3x = 10000*100`

`x = (10000*100)/(3)`

`x = 333333`

The budgeted cost of direct labor for the month is $333,333.