Question

Pasadena Candle Inc. budgeted production of 785,000 candles for January. Each candle requires molding. Assume that six minutes are required to mold each candle. If molding labor costs $18 per hour, determine the direct labor cost budget for January. Pasadena Candle Inc. Direct Labor Cost Budget For the Month Ending January 31 Hours required for assembly: Candles min. Convert minutes to hours ÷ min. Molding hours hrs. Hourly rate × $ Total direct labor cost

Answer 1

Direct labour cost budget= $1,413,000.

Step-by-step explanation:

The direct labor cost budget is a function of the production product budget. The quantity of the product budgeted to be produced would determine the labor cost budget.

Direct labour budget = Production budget × standard hours × standard labour rate per hour

Standard hour = 6/60 =0.1 (note there are 60 minutes in an hour)

Direct labour budget = 785,000 × 0.1× 18 = $1,413,000.

Direct labour cost budget= $1,413,000.