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1 February, 15:51

LBC Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 3.1 hours of direct labor at the rate of $27.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June. The company plans to sell 40,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 200 and 100 units, respectively.

The budgeted direct labor cost per unit of Product WZ would be:

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  1. 1 February, 16:01
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    Direct labor budget:

    Total hours = 123,690 hours

    Total cost = $3,339,630

    Explanation:

    Giving the following information:

    Direct labor per unit = 3.1 hour

    Direct labor rate = $27

    Production budget for June:

    Sales = 40,000 units

    Ending inventory = 100 units

    Beginning inventory = (200) units

    Total production = 39,900 units

    Now, we can determine the total number of hours required and the total cost:

    Direct labor budget:

    Total hours = 39,900*3.1 = 123,690 hours

    Total cost = 123,690*27 = $3,339,630
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