Jaybird Inc.produces leather handbags.The sales budget for the next four months is: July 5,000 units,August 7,000,September 7,500,October 8,000.Jaybird Inc.'s ending finished goods inventory policy is 10% of the following month's sales.Each handbag requires 1.3 hours of unskilled labor (paid $8 per hour)and 2.2 hours of skilled labor (paid $15 per hour).What will be the total labor cost for the month of August?

Question

Quizplus · Accepted Answer

To calculate the total labor cost for August, first determine the production requirement: 7,000 units for August plus 10% of September's sales (750 units) minus 10% of August's sales (700 units), totaling 7,050 units. Each unit requires 1.3 hours of unskilled labor and 2.2 hours of skilled labor. Calculate the labor hours and multiply by the respective wage rates: (7,050 units * 1.3 hours * $8) + (7,050 units * 2.2 hours * $15) = $73,320 + $232,650 = $305,970.