Production and Direct Labor Cost Budgets Two-Leg Company manufactures slacks and

Question

Production and Direct Labor Cost Budgets

Two-Leg Company manufactures slacks and jeans under a variety of brand names, such as Kickers and 101 Denims. Slacks and jeans are assembled by a variety of different sewing operations. Assume that the sales budget for Kickers and 101 Denims shows estimated sales of 21,610 and 44,680 pairs, respectively, for March 2016. The finished goods inventory is assumed as follows:

Assume the following direct labor data per 10 pairs of Kickers and 101 Denims for four different sewing operations:

a. Prepare a production budget for March.

b. Prepare the March direct labor cost budget for the four sewing operations, assuming a $11 wage per hour for the inseam and outerseam sewing operations and a $18 wage per hour for the pocket and zipper sewing operations.

Kickers 101 Denims March 1 estimated inventory 970 1,260 March 31 desired inventory 360 1,580

Explanation / Answer

a)Production Budget

b)direct labor cost budget

To calulated direct labor cost we need to calulate hours required seperately for both

for example for inseam kickers requires 20 minutes and given 10 kickers are produced within 1hour so for

21,000 we need         .33*21,000/10 = 700

Similarly for denims it requires 14 minutes producing 101 in 1 hours

so 45,000 units will require = .233*45,000/101 = 103

that makes total of 700 +103 = 803 minutes ,similalry calulcate for others .

Kicker 101 Denim Expected units to be sold 21,610 44,680 add:Closing inventory     360 1,580 total units 21,970 46,260 less:Opening inventory (970) (1,260) Total units to be produced 21,000 45,000

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