Darius is a factory supervisor, and he is currently preparing the production budget for the next quarter. The following production budget was in place for the current quarter of the year:
Darius anticipates that in the first, second, and third month of the next quarter, production will increase by 5%, 7%, and 8%, respectively, compared to the previous month's production. If every unit needs 2.5 hours of direct labor (DL) time and the hourly wage rate is $15 per hour, than what will the total number of budgeted production units, the total number of direct labor hours, and the total direct labor cost for the next quarter be (Round your calculations to the nearest whole number amounts)?
A) Total budgeted production units: 1,960; Total DL hours: 4,900; Total DL cost: $73,500
B) Total budgeted production units: 2,092; Total DL hours: 5,230; Total DL cost: $78,450
C) Total budgeted production units: 2,370; Total DL hours: 5,925; Total DL cost: $88,875
D) Total budgeted production units: 6,638; Total DL hours: 16,595; Total DL cost: $248,925

Question

Darius is a factory supervisor, and he is currently preparing the production budget for the next quarter. The following production budget was in place for the current quarter of the year:
 Darius anticipates that in the first, second, and third month of the next quarter, production will increase by 5%, 7%, and 8%, respectively, compared to the previous month's production. If every unit needs 2.5 hours of direct labor (DL) time and the hourly wage rate is $15 per hour, than what will the total number of budgeted production units, the total number of direct labor hours, and the total direct labor cost for the next quarter be (Round your calculations to the nearest whole number amounts)?
A) Total budgeted production units: 1,960; Total DL hours: 4,900; Total DL cost: $73,500 
B) Total budgeted production units: 2,092; Total DL hours: 5,230; Total DL cost: $78,450 
C) Total budgeted production units: 2,370; Total DL hours: 5,925; Total DL cost: $88,875 
D) Total budgeted production units: 6,638; Total DL hours: 16,595; Total DL cost: $248,925

Quizplus · Accepted Answer

Budgeted Units to be Produced = Budgeted Production for April + Budgeted Production for May + Budgeted Production for June = 735 + 786 + 849 = 2,370.
Budgeted DL Hours Needed = Budgeted Units to be Produced × Quantity of DL Hours per Unit = 2,370 Units × 2.5 Hours = 5,925 Hours.
Budgeted DL Cost = Budgeted DL Hours Needed × Budgeted DL Cost per Hour = 5,925 × $15 = $88,875.
See additional explanation below:
 11ee941a_b720_45e3_bdb6_01462b717435_TBW1041_00 11ee941a_b720_45e4_bdb6_bb39a6d53a5a_TBW1041_00

Darius Is a Factory Supervisor, and He Is Currently Preparing