di Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year:

At Adi, 30% of raw materials purchases are normally paid for in the month of purchase. The remaining 70% is paid for in the month following the purchase.
-If the company has budgeted to produce 20,000 Clops in January, then the budgeted direct labor cost for January is:

Question

di Manufacturing Corporation is estimating the following raw material purchases for the final four months of the year:

At Adi, 30% of raw materials purchases are normally paid for in the month of purchase. The remaining 70% is paid for in the month following the purchase.
-If the company has budgeted to produce 20,000 Clops in January, then the budgeted direct labor cost for January is:

Quizplus · Accepted Answer

The budgeted direct labor cost can be calculated by multiplying the budgeted production units by the budgeted direct labor cost per unit. The problem does not provide the direct labor cost per unit, so we cannot calculate it exactly. However, by using the provided answer choices, we can determine which one is the closest to the calculated cost.

To calculate the budgeted direct labor cost, we need to know the direct labor cost per unit. Let's assume it is $8.20 per unit (this is just an example assumption).

Budgeted direct labor cost = Budgeted production units x Direct labor cost per unit
Budgeted direct labor cost = 20,000 x $8.20
Budgeted direct labor cost = $164,000

The closest answer choice to our calculated cost is B, which is $180,400. This represents a difference of $16,400 or about 10%. While this is a significant difference, we do not have enough information to determine the exact direct labor cost per unit, so we must rely on the provided answer choices to make our selection.

Di Manufacturing Corporation Is Estimating the Following Raw Material Purchases