The company has budgeted to produce 25,000 units of Product T in June.The finished goods inventories on June 1 and June 30 were budgeted at 500 and 700 units,respectively.Budgeted direct labour costs incurred in June would be:

Question

Quizplus · Accepted Answer

To determine the budgeted direct labour costs, we need to use the following formula:

Budgeted Direct Labour Cost = Budgeted Direct Labour Hours x Budgeted Direct Labour Rate

Budgeted Direct Labour Hours can be calculated as follows:

Total units to be produced = 25,000
Add: Beginning finished goods inventory = 500
Less: Ending finished goods inventory = 700
Total units needed = 24,800
Direct labour hours per unit = 2 hours
Total direct labour hours = Total units needed x Direct labour hours per unit
= 24,800 x 2
= 49,600

Budgeted Direct Labour Rate is not given in the question. Therefore, we cannot directly calculate the budgeted direct labour cost. However, we can use the given options to reverse-engineer the budgeted direct labour rate.

Option C gives a budgeted direct labour cost of $295,750. Dividing this amount by the total direct labour hours (49,600) gives us a budgeted direct labour rate of $5.96 per direct labour hour.

Therefore, the answer is C, $295,750.

The Company Has Budgeted to Produce 25,000 Units of Product