Veltri Corporation is working on its direct labor budget for the next two months
ID: 2503916 • Letter: V
Question
Veltri Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.78 direct labor-hours. The direct labor rate is $10.00 per direct labor-hour. The production budget calls for producing 6,900 units in October and 6,700 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?
Veltri Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.78 direct labor-hours. The direct labor rate is $10.00 per direct labor-hour. The production budget calls for producing 6,900 units in October and 6,700 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
Numbe of direct hours in October=6900*0.78=5382
Numbe of direct hours in November=6700*0.78=5226
Since these are less than 5480 hours, total number of direct labour hours=5480*2=10960
Budgeted direct labor cost=10960*10=$109,600
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