Question

Pooler Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.78 direct labor-hours. The direct labor rate is $11.20 per direct labor-hour. The production budget calls for producing 6,900 units in April and 6,700 units in May. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 5,480 hours in total each month even if there is not enough work to keep them busy. What would be the total combined direct labor cost for the two months?

Answer 1

$122,752

Step-by-step explanation:

The computation of total combined direct labor cost is shown below:-

Total number of units to be produced in April and May = 6,900 + 6,700

= 13,600

Total direct labor hours required = Total number of units to be produced × Output units

= 13,600 × 0.78

= 10,608

The total combined direct labor cost for the two months = Hours in total each month × 2 months × Direct labor rate

=5,480 × 2 × $11.20

= $122,752