Northwest's production data for one of its products were taken from the most recent quarterly production budget: If it takes two direct labor hours to produce each unit and Northwest's cost per labor hour is $15, direct labor cost for August would be budgeted at:

Question

Northwest's production data for one of its products were taken from the most recent quarterly production budget:  If it takes two direct labor hours to produce each unit and Northwest's cost per labor hour is $15, direct labor cost for August would be budgeted at:

Quizplus · Accepted Answer

According to the given information, it takes two direct labor hours to produce each unit. Therefore, the total direct labor hours for August can be calculated as:

Total production units = 4,800 + 1,200 + 600 + 300 = 6,900 units

Direct labor hours = 6,900 units × 2 hours per unit = 13,800 hours

The direct labor cost can be calculated as:

Direct labor cost = Direct labor hours × Cost per labor hour

Direct labor cost = 13,800 hours × $15 per hour = $207,000

Therefore, the direct labor cost for August would be budgeted at $33,000. (Option C)

Northwest's Production Data for One of Its Products Were Taken