Question

Sthilaire Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.63 direct labor-hours. The direct labor rate is $9.00 per direct labor-hour. The production budget calls for producing 1,200 units in April and 1,100 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 960 hours in total each month even if there is not enough work to keep them busy. 10 points Required: Prepare the direct labor budget for the next two months. (Round "labor-hours per unit" &"labor cost per hour" answers to 2 decimal places.)

Answer 1

Answer and Explanation:

The preparation of the direct labor budget is presented below:

Particulars April May

Required production in units (a) 1,200 1,100

Direct labor-hours per unit (b) 0.63 0.63

Total direct labor-hours needed (a × b) 756 693

Total direct labor hour paid 960 960

Multiply Direct labor cost per hour $9 $9

Total direct labor cost $8,640 $8,640

As there is at least 960 hours and the needed units is less than 960 so we considered the 960 hours and then multiply it by direct labor cost per hour so that the total direct labor cost could come