Babcock Builders is a well-regarded construction company that serves as a genera
ID: 2560648 • Letter: B
Question
Babcock Builders is a well-regarded construction company that serves as a general contractor for both residential and commercial construction projects. One of the company's signature features is its cabinetry. The company's founder and president, Bill Babcock, began manufacturing cabinets six years ago in an effort to capitalize on the company's reputation and the skills of its craftsmen. The company's production budget for the first seven months of the year is as follows: Units 10,000 February 17,000 13,000 18,500 22,100 24,300 26,200 Month January March April May June July Babcock's most popular cabinet is a small cherry wood cabinet typically used in bathrooms. Each completed unit requires 3.5 hours of direct labor, and the skilled labor costs an average of $25 per hour. The company applies overhead at the rate of $3 per direct labor hour. A. Prepare a direct labor budget for January through June. B. Prepare a manufacturing overhead budget for the same period.Explanation / Answer
Direct labor Budget
1-
month
january
february
march
april
may
june
july
no of units produced
10000
17000
13000
18500
22100
24300
26200
direct labor hours required per unit
3.5
3.5
3.5
3.5
3.5
3.5
3.5
total labor hours required
35000
59500
45500
64750
77350
85050
91700
direct labor cost per hour
25
25
25
25
25
25
25
total direct labor cost = labor hours*labor hour rate
875000
1487500
1137500
1618750
1933750
2126250
2292500
2-
Manufacturing overhead budget
month
january
february
march
april
may
june
july
total labor hours required
35000
59500
45500
64750
77350
85050
91700
overhead cost per labor hour
3
3
3
3
3
3
3
total overhead applied = total labor hours*overhead rate per labor hour
105000
178500
136500
194250
232050
255150
275100
Direct labor Budget
1-
month
january
february
march
april
may
june
july
no of units produced
10000
17000
13000
18500
22100
24300
26200
direct labor hours required per unit
3.5
3.5
3.5
3.5
3.5
3.5
3.5
total labor hours required
35000
59500
45500
64750
77350
85050
91700
direct labor cost per hour
25
25
25
25
25
25
25
total direct labor cost = labor hours*labor hour rate
875000
1487500
1137500
1618750
1933750
2126250
2292500
2-
Manufacturing overhead budget
month
january
february
march
april
may
june
july
total labor hours required
35000
59500
45500
64750
77350
85050
91700
overhead cost per labor hour
3
3
3
3
3
3
3
total overhead applied = total labor hours*overhead rate per labor hour
105000
178500
136500
194250
232050
255150
275100
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