Veltri Corporation is working on its direct labor budget for the next two months
ID: 2470673 • Letter: V
Question
Veltri Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.75 direct labor-hours. The direct labor rate is $10.10 per direct labor-hour. The production budget calls for producing 7,200 units in October and 7,000 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?
$123,725.00
$107,565.00
$110,696.00
$108,373.00
Veltri Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.75 direct labor-hours. The direct labor rate is $10.10 per direct labor-hour. The production budget calls for producing 7,200 units in October and 7,000 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
Particulars
October
November
Total
Production
7,200
7,000
No of hours per unit
0.75
0.75
Total no of hours
5,400
5,250
Guarenteed hours
5,480
5,480
Payment for no of hours to be made
5,480
5,480
Rate per hour
10.10
10.10
Direct labour cost
55,348
55,348
110,696
The total combined direct labor cost for two months October and November = 55,348 x 2 = $ 110,696.
Particulars
October
November
Total
Production
7,200
7,000
No of hours per unit
0.75
0.75
Total no of hours
5,400
5,250
Guarenteed hours
5,480
5,480
Payment for no of hours to be made
5,480
5,480
Rate per hour
10.10
10.10
Direct labour cost
55,348
55,348
110,696
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