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5 July, 12:24

Veltri Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.77 direct labor-hours. The direct labor rate is $11.20 per direct labor-hour. The production budget calls for producing 7,100 units in October and 6,900 units in November. 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

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  1. 5 July, 12:48
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    Total direct labor cost = $122,752

    Explanation:

    Giving the following information:

    Each unit of output requires 0.77 direct labor-hours.

    The direct labor rate is $11.20 per direct labor-hour.

    Production budget:

    October = 7,100 units

    November = 6,900 units

    Minimum hours = 5,480 hours

    First, we need to determine the number of hours required for each month.

    October = 7,100*0.77 = 5,467 hours

    November = 6,900*0.77 = 5,313 hours

    Direct labor budget:

    October = 5,480*11.2 = 61,376

    November = 61,736

    Total cost = $122,752
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