Smith Company makes and sells a single product called a Pod. Each Pod requires 1.4 hours of labor at a labor rate of $9.60 per hour. Smith Company needs to prepare a Direct Labor Budget for the second quarter of the year.
-In June the company has budgeted to produce 22,000 Pods. The finished goods inventory on June 1 and June 30 were budgeted at 500 and 800 units, respectively. Budgeted direct labor costs incurred in June would be:

Question

Quizplus · Accepted Answer

To calculate the direct labor costs for June, first determine the number of Pods to be produced: 22,000 Pods. Each Pod requires 1.4 hours of labor, so total labor hours needed = 22,000 Pods * 1.4 hours/Pod = 30,800 hours. The labor rate is $9.60 per hour, so total direct labor cost = 30,800 hours * $9.60/hour = $295,680.

Smith Company Makes and Sells a Single Product Called a Pod