Percy's Pickled Snacks produces several types of pickled vegetables.The company budgets for each quarter in the last month of the previous quarter.In early March, Percy is preparing the budget for pickled beets.Budgeted sales are 12,000 jars for April, 16,000 jars for May, and 19,000 jars for June.Each jar requires 1.2 pounds of beets.The pickling process takes 60 minutes for 20 jars.Because pressurized cooking is used, the processing is monitored by an employee at all times.Each jar of pickled beets sells for $15.00.Percy requires ending Finished Goods inventory equal to 25% of the following month's sales.Other information is as follows: What is Percy's direct labor budget for May?
A)$12,450
B)$10,050
C)$7,200
D)$9,600

Question

Percy's Pickled Snacks produces several types of pickled vegetables.The company budgets for each quarter in the last month of the previous quarter.In early March, Percy is preparing the budget for pickled beets.Budgeted sales are 12,000 jars for April, 16,000 jars for May, and 19,000 jars for June.Each jar requires 1.2 pounds of beets.The pickling process takes 60 minutes for 20 jars.Because pressurized cooking is used, the processing is monitored by an employee at all times.Each jar of pickled beets sells for $15.00.Percy requires ending Finished Goods inventory equal to 25% of the following month's sales.Other information is as follows:  What is Percy's direct labor budget for May?
A)$12,450 
B)$10,050 
C)$7,200 
D)$9,600

Quizplus · Accepted Answer

To determine the direct labor budget for May, we need to calculate the number of labor hours required to produce the 16,000 jars of pickled beets.

First, we need to determine the total pounds of beets needed to produce 16,000 jars:

16,000 jars x 1.2 pounds of beets per jar = 19,200 pounds of beets

Next, we need to determine the number of batches required to produce 16,000 jars:

16,000 jars ÷ 20 jars per batch = 800 batches

Each batch takes 60 minutes to process, so the total processing time required is:

800 batches x 60 minutes per batch = 48,000 minutes

Since one employee can only work for 2,000 minutes per month (40 hours per week x 50 weeks per year ÷ 12 months per year), Percy will need:

48,000 minutes ÷ 2,000 minutes per employee per month = 24 employees

Therefore, the direct labor cost for May is:

24 employees x $4200 per employee per month = $10,050

Percy's Pickled Snacks Produces Several Types of Pickled Vegetables