Jenson is in the furniture business. He observed increasing demand for office chairs, and strongly anticipates even better results in the next quarter. Jenson decides to reconsider his production plans, and he comes up with the following production budget for the second quarter:
Jenson determines that every unit needs 2 hours of direct labor (DL) time. He pays $20 per hour to his daily wage workers. Considering the given information, which of the following is correct?

Question

Jenson is in the furniture business. He observed increasing demand for office chairs, and strongly anticipates even better results in the next quarter. Jenson decides to reconsider his production plans, and he comes up with the following production budget for the second quarter:
 Jenson determines that every unit needs 2 hours of direct labor (DL) time. He pays $20 per hour to his daily wage workers. Considering the given information, which of the following is correct?

Quizplus · Accepted Answer

Budgeted DL Hours Needed = Budgeted Units to be Produced × Quantity of DL Hours per Unit = [(600 × 2) + (660 × 2) + (700 × 2)] = (1,200 + 1,320 + 1,400) = 3,920.
Budgeted DL Cost = Budgeted DL Hours Needed × Budgeted DL Cost per Hour = 3,920 × $20 = $78,400.

Jenson Is in the Furniture Business