Chang Inc.has developed the following unit costs for the production of one of its products,based on a normal activity of 10,000 units per month: What is the total amount of direct labor budgeted for a month in which production is expected to be 11,000 units?
A)$165,000.
B)$225,000.
C)$247,500.
D)$297,000.

Question

Chang Inc.has developed the following unit costs for the production of one of its products,based on a normal activity of 10,000 units per month:  What is the total amount of direct labor budgeted for a month in which production is expected to be 11,000 units?
A)$165,000. 
B)$225,000. 
C)$247,500. 
D)$297,000.

Quizplus · Accepted Answer

From the given table, we can see that the direct labor cost per unit is $22.50. Therefore, the total direct labor cost for producing 11,000 units would be:
Total direct labor cost = Direct labor cost per unit * Number of units produced
Total direct labor cost = $22.50 * 11,000
Total direct labor cost = $247,500
Hence, the correct answer is option C.

Chang Inchas Developed the Following Unit Costs for the Production of of One