Movers Company manufactures sneakers.The production of their new sneaker for the coming three months is budgeted as follows:
Each sneaker requires 2 hours of direct labor time.Direct labor wages average $15 per hour.Monthly overhead averages $10 per direct labor hour plus fixed overhead of $4,500.What is the direct labor cost budgeted for September?

Question

Movers Company manufactures sneakers.The production of their new sneaker for the coming three months is budgeted as follows: 
 Each sneaker requires 2 hours of direct labor time.Direct labor wages average $15 per hour.Monthly overhead averages $10 per direct labor hour plus fixed overhead of $4,500.What is the direct labor cost budgeted for September?

Quizplus · Accepted Answer

Direct labor cost for September = Units to be produced × Direct labor time per unit in hours × Average wage per hour
Direct labor cost for September = 50,000 sneakers × 2.00 direct labor hours × $15 = $1,500,000

Movers Company Manufactures Sneakers