Veltri Corporation is working on its direct labor budget for the next two months
ID: 2449493 • Letter: V
Question
Veltri Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.77 direct labor-hours. The direct labor rate is $10.20 per direct labor-hour. The production budget calls for producing 7,000 units in October and 6,800 units in November. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 5,480 hours in total each month even if there is not enough work to keep them busy. What would be the total combined direct labor cost for the two months?
Explanation / Answer
Hours used In october = 7000 *.77 = 5390 hours [minimum hours paid will be 5480 hours]
Hours used in november = 6800 * .77 = 5236 hours [minimum 5480 hours to be paid]
Total Hours to be paid = 5480 + 5480 = 10960 Hours
Total combined direct labor cost = 10960 * 10.20 =$ 111,792
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