Sellars Inc.manufactures widgets.At 30 June,the company had 2000 widgets in inventory.The company's policy is to maintain a widget ending inventory equal to 10 per cent of next month's sales.In addition,each widget manufactured requires 6 minutes of assembly and inspecting time at a cost of $.25 per minute.
The company expects the following sales activity for the third quarter of the year:
$\begin{array}{ll}
\text { July } & 25000 \text { units } \
\text { August } & 38000 \text { units } \
\text { September } & 30000 \text { units }
\end{array}$
What is the projected direct labour cost for August?
A) $55 800
B) $57 000
C) $61 500
D) $58 200

Question

Sellars Inc.manufactures widgets.At 30 June,the company had 2000 widgets in inventory.The company's policy is to maintain a widget ending inventory equal to 10 per cent of next month's sales.In addition,each widget manufactured requires 6 minutes of assembly and inspecting time at a cost of $.25 per minute.
The company expects the following sales activity for the third quarter of the year:
$\begin{array}{ll}
\text { July } & 25000 \text { units } \
\text { August } & 38000 \text { units } \
\text { September } & 30000 \text { units }
\end{array}$ 
What is the projected direct labour cost for August?
A) $55 800
B) $57 000
C) $61 500
D) $58 200

Quizplus · Accepted Answer

To calculate the projected direct labor cost for August, we first need to determine the number of units to be produced in August. The ending inventory for August should be 10% of September's sales (3000 units), and the beginning inventory for August is the ending inventory of July, which is 10% of August's sales (3800 units).1. Calculate the units to be produced in August:$$ \text{Units to be produced in August} = \text{Sales in August} + \text{Ending inventory for August} - \text{Beginning inventory for August} $$$$ = 38000 + 3000 - 3800 = 35200 \text{ units} $$2. Calculate the total assembly and inspecting time for August:$$ \text{Total time} = 35200 \text{ units} \times 6 \text{ minutes per unit} = 211200 \text{ minutes} $$3. Calculate the direct labor cost for August:$$ \text{Direct labor cost} = 211200 \text{ minutes} \times \$0.25 \text{ per minute} = \$52800 $$Therefore, the projected direct labor cost for August is $52,800, but since this option is not available, it seems there was a mistake in the calculation or interpretation of the options provided. Given the options, none directly match the calculated figure, suggesting a need to reevaluate the provided options or the calculation process.

Sellars Inc What Is the Projected Direct Labour Cost for August? A)

Sellars Inc What Is the Projected Direct Labour Cost for August?
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