LDG Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.0 hours of direct labor at the rate of $10.50 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June.
-The company plans to sell 22,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 100 and 400 units, respectively. Budgeted direct labor costs for June would be:

Question

Quizplus · Accepted Answer

To calculate the direct labor costs for June, first determine the number of units to be produced: 22,000 units to be sold + 400 ending inventory - 100 beginning inventory = 22,300 units to be produced. Each unit requires 2 hours of labor, so 22,300 units x 2 hours/unit = 44,600 hours. At $10.50 per hour, the total cost is 44,600 hours x $10.50/hour = $468,300.

LDG Corporation Makes and Sells a Product Called Product WZ