Ace Racket Company manufactures two types of tennis rackets, the Junior and Pro

Question

Ace Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for July for the two rackets is as follows: Junior Production budget is 1,500 units and Pro- Striker Production budge is6,200 units Both rackets are produced in two departments, Forming and Assembly.

The direct labor hours required for each racket are estimated as follows:

Forming Department Assembly Department Junior 0.16 hour per unit 0.24 hour per unit

Pro Striker 0.20 hour per unit 0.30 hour per unit

The direct labor rate for each department is as follows:

Forming Department $18.00 per hour

Assembly Department $14.00 per hour

Prepare the direct labor cost budget for July 2016.

Ace Racket Company Direct Labor Cost Budget For the Month Ending July 31, 2016

Forming Department Assembly Department

Hours required for production:

Junior

Pro Striker

Total Hourly rate

Total direct labor cost

Explanation / Answer

Ace Racket Company Direct Labor Cost Budget For the Month Ending July 31, 2016 Particulars Basis For Calculation Forming Department Assembly Department Production 1500 6200 Hours Required ( Junior ) Units Required * Hours per unit Forming : 0.16*1500 Assembly: 0.24*1500 240 360 Hours Required ( Pro ) Units Required * Hours per unit Forming : 0.20*6200 Assembly: 0.3*6200 1240 1860 Total Hours Department wise 1480 2220 Total Hourly rate 18 14 Total Direct Labour Cost ( Junior) Hourly Rate * Hours Required 26640 31080

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