Veltri Corporation is working on its direct labor budget for the next two months
ID: 2477290 • 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 $10.00 per direct labor-hour. The production budget calls for producing 7,100 units in October and 6,900 units in November. The company guarantees its direct labor workers a 40-hout 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 it there is not enough work to keep them busy. What would be the total combined direct labor cost for the two months? $106,550,00 $120,750,00 $109,600,00 $105,000,00Explanation / Answer
Correct Answer:
$109600
Working Note:
Labor hour required per output = .75 labor hour per output
Production output for October = 7100 units
Total Labor hour required for October = 7100*.75 = 5325 labor hours
Production output for November = 6900 units
Total Labor hour required for October = 6900*.75 = 5175 labor hours
Since, minimum guaranteed labor hour per month is 5480, even if less work is available in a month. Also, in a given scenario, actual requirement of labor hours in both the moth are less than the minimum guaranteed labor hours. Thus, in the month of October and November, labor hour used are 5480 in each of the moth.
Thus,
Total labor hours = 2*5480 = 10960 labor hours
Total direct labor cost = $10*10960 = $109600
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.