Lester Production is planning to sell 600 boxes of ceramic tile, with production estimated at 580 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.50 per pound and employees of the company are paid $15.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Lester has 2,600 pounds of clay mix in beginning inventory and wants to have 3,000 pounds in ending inventory.
What is the total amount to be budgeted for direct labor for the month?

Question

Quizplus · Accepted Answer

To calculate the budgeted direct labor cost for the month, we need to first determine how many direct labor hours are needed for the production of 600 boxes of tile.

Each box requires a quarter hour of direct labor, so 600 boxes will require:

600 boxes x 0.25 hour per box = 150 hours of direct labor

The direct labor rate is $15 per hour, so the total budgeted direct labor cost is:

150 hours x $15 per hour = $2,250

Therefore, the correct answer is choice A, $2,175.

Lester Production Is Planning to Sell 600 Boxes of Ceramic