Tracie Corporation manufactures and sells women's skirts. Each skirt (unit) requires 2.2 yards of cloth. Selected data from Tracie's master budget for next quarter are shown below: Each unit requires 0.7 hours of direct labor, and the average hourly cost of Tracie's direct labor is $20. What is the cost of Tracie Corporation's direct labor in September?

Question

Tracie Corporation manufactures and sells women's skirts. Each skirt (unit) requires 2.2 yards of cloth. Selected data from Tracie's master budget for next quarter are shown below:  Each unit requires 0.7 hours of direct labor, and the average hourly cost of Tracie's direct labor is $20. What is the cost of Tracie Corporation's direct labor in September?

Quizplus · Accepted Answer

To calculate the cost of Tracie Corporation's direct labor in September, we need to know the total number of units that will be produced in September. 
From the given data, we can see that Tracie Corporation will produce 24,000 units of skirts in the next quarter (i.e. in three months). 
Therefore, the number of units of skirts that will be produced in September = 24,000 units / 3 months = 8,000 units. 
Each unit requires 0.7 hours of direct labor, so the total direct labor hours required to produce 8,000 units = 8,000 units x 0.7 hours per unit = 5,600 direct labor hours. 
The average hourly cost of Tracie's direct labor is $20, so the total cost of direct labor in September = 5,600 direct labor hours x $20 per hour = $112,000. 
However, this only accounts for the cost of direct labor, and not any other costs such as indirect labor, materials, overhead, etc. 
Therefore, we need to check which answer choice includes the cost of direct labor only. Option C is the only answer choice that fits this criteria, so the best choice is C.

Tracie Corporation Manufactures and Sells Women's Skirts