Question

Piechocki Corporation manufactures and sells a single product. The company uses units as the measure of activity in its budgets and performance reports. During May, the company budgeted for 8,300 units, but its actual level of activity was 8,350 units. The company has provided the following data concerning the formulas used in its budgeting and its actual results for May: Data used in budgeting: Fixed element per month Variable element per unit Revenue - $ 35.80 Direct labor $ 0 $ 6.40 Direct materials 0 12.10 Manufacturing overhead 40,000 2.10 Selling and administrative expenses 27,100 4.00 Total expenses $ 67,100 $ 24.60 Actual results for May: Revenue $ 297,500 Direct labor $ 52,870 Direct materials $ 99,580 Manufacturing overhead $ 51,500 Selling and administrative expenses $ 30,630 The direct labor in the planning budget for May would be closest to:

Answer 1

Budgeted direct labor= $53,120

Step-by-step explanation:

Giving the following information:

The company budgeted for 8,300 units

Direct labor= $6.40 per unit

To calculate the direct labor budget, we need to use the following formula:

Budgeted direct labor= total number of units*unitary cost

Budgeted direct labor= 8,300*6.4

Budgeted direct labor= $53,120