Gottberg Mugs is planning to sell 2,000 mugs and produce 2,200 mugs during April.Each mug requires 2 kilograms of resin and one-half hour of direct labour.Resin costs $1 per kilogram and employees of the company are paid $12.50 per hour.Manufacturing overhead is applied at a rate of 120% of direct labour costs.Gottberg has 2,000 kilograms of resin in beginning inventory and wants to have 2,400 kilograms in ending inventory.How much is the total amount of budgeted direct labour for April?

Question

Quizplus · Accepted Answer

To find the budgeted direct labour, we need to first calculate the total direct labour hours required for production.

Each mug requires 0.5 hours of direct labour, and 2,200 mugs will be produced, so the total direct labour hours needed is:

0.5 hours/mug x 2,200 mugs = 1,100 hours

Next, we need to calculate the direct labour cost for this amount of labour. Employees are paid $12.50 per hour, so the total cost is:

1,100 hours x $12.50/hour = $13,750

Therefore, the answer is B.

Gottberg Mugs Is Planning to Sell 2,000 Mugs and Produce