Question

Watson Company is planning to sell 400 buckets and produce 380 buckets during April. Each bucket requires 500 grams of plastic and one-half hour of direct labor. Plastic costs $10 per 500 grams and employees of the company are paid $15.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Watson has 300 kilos of plastic in beginning inventory and wants to have 200 kilos in ending inventory. How much is the total amount of budgeted direct labor for April

Answer 1

$2,850

Step-by-step explanation:

The computation of total amount of budgeted direct labor for April is shown below:-

Total amount of budgeted direct labor = Buckets produced × (Estimated labor hour ÷ Half an hour needed for producing one unit bucket) × Labor rate

= 380 × (30 ÷ 60) × $15

= 380 × 0.5 × $15

= $2,850

Therefore for computing the total amount of budgeted direct labor for April we simply applied the above formula.