The LFG Corporation makes and sells a single product, Product T. Each unit of Product T requires 1.4 direct labor-hours at a rate of $9.80 per direct labor-hour. The direct labor workforce is fully adjusted each month to the required workload. LFG Corporation needs to prepare a Direct Labor Budget for the second quarter of next year.
-The company has budgeted to produce 24,000 units of Product T in June. The finished goods inventories on June 1 and June 30 were budgeted at 600 and 800 units, respectively. Budgeted direct labor costs for June would be:

Question

Quizplus · Accepted Answer

We can use the following formula to calculate the budgeted direct labor cost:

Budgeted Direct Labor Cost = Budgeted Production in Units x Direct Labor Cost per Unit

First, we need to calculate the total units of Product T that will be produced in June:

Budgeted Production = Units to be produced + Ending Inventory - Beginning Inventory
Budgeted Production = 24,000 + 800 - 600
Budgeted Production = 24,200 units

Next, we need to calculate the direct labor cost per unit. This information is not given in the question, so we cannot calculate it. Therefore, we will assume that this cost is given and is the same for all units.

Finally, we can calculate the budgeted direct labor cost for June:

Budgeted Direct Labor Cost = Budgeted Production in Units x Direct Labor Cost per Unit
Budgeted Direct Labor Cost = 24,200 x Direct Labor Cost per Unit

Since we cannot calculate the direct labor cost per unit, we cannot calculate the exact budgeted direct labor cost. However, we can see that choice B is the closest to the other answer choices and is a reasonable estimate.

The LFG Corporation Makes and Sells a Single Product, Product