Morie Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.75 direct labor-hours. The direct labor rate is $8.10 per direct labor-hour. The production budget calls for producing 2,000 units in March and 2,300 units in April. 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 1,760 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?
A)$28,512.00
B)$26,406.00
C)$28,228.50
D)$26,122.50

Question

Quizplus · Accepted Answer

The total direct labor hours required for March is 2,000 units * 0.75 hours/unit = 1,500 hours. For April, it is 2,300 units * 0.75 hours/unit = 1,725 hours. Since the company guarantees 1,760 hours per month, they will pay for 1,760 hours in March and 1,725 hours in April. The total cost is (1,760 hours * $8.10/hour) + (1,725 hours * $8.10/hour) = $28,512.00.

Morie Corporation Is Working on Its Direct Labor Budget for the Next