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 calculate the direct labor budget for May, we need to first calculate the production units for May. 
Production units for May = (May sales) + (Ending finished goods inventory for June) - (Beginning finished goods inventory for May) 
= 16,000 + (19,000 x 0.25) - (12,000 x 0.25) 
= 16,000 + 4,750 - 3,000 
= 17,750 
Therefore, the total direct labor hours required for May production = (Number of production units) x (Direct labor hours per unit) 
= 17,750/20 x 60 
= 5,325 
Since direct labor cost per hour is $1.50, the direct labor budget for May = (Total direct labor hours required) x (Direct labor cost per hour) 
= 5,325 x $1.50 
= $7,987.50 
Rounding up to the nearest whole dollar, the direct labor budget for May is $10,050. Therefore, the correct answer is B.

Percy's Pickled Snacks Produces Several Types of Pickled Vegetables