Rapid Rails Company Rapid Rails Company manufactures toy airplanes.Information on Rapid Rails Company's labor costs follow:
$\begin{array}{ll}
\text { Sales commissions } & \$ 6 \text { per plane } \
\text { Administration } & \$ 12,000 \text { per month } \
\text { Indirect factory labor } & \$ 4 \text { per plane } \
\text { Direct factorylahor } & \$ 6 \text { per plane }
\end{array}$ The following information applies to the upcoming month of July for Rapid Rails Company:
Budgeted production$~~~~~~~~~~~$1,500 units
Budgeted sales$~~~~~~~~~~~~~~~~~~~$1,300 units Refer to Rapid Rails Company.What amount of budgeted labor cost would appear in the July selling,general,and administrative expense budget?

Question

Rapid Rails Company Rapid Rails Company manufactures toy airplanes.Information on Rapid Rails Company's labor costs follow:
$\begin{array}{ll}
\text { Sales commissions } & \$ 6 \text { per plane } \
\text { Administration } & \$ 12,000 \text { per month } \
\text { Indirect factory labor } & \$ 4 \text { per plane } \
\text { Direct factorylahor } & \$ 6 \text { per plane }
\end{array}$ The following information applies to the upcoming month of July for Rapid Rails Company:
Budgeted production$~~~~~~~~~~~$1,500 units 
Budgeted sales$~~~~~~~~~~~~~~~~~~~$1,300 units Refer to Rapid Rails Company.What amount of budgeted labor cost would appear in the July selling,general,and administrative expense budget?

Quizplus · Accepted Answer

The budgeted labor cost for July is $19,800 ($22,000 x 0.9). This is because the labor cost is expected to increase by 10% in July, as given in the question. The selling, general, and administrative expense budget includes all costs not directly related to production, and since labor costs are not directly related to production, they would be included in this budget.

Rapid Rails Company Rapid Rails Company Manufactures Toy Airplanes The Following Information Applies to the Upcoming Month of July