Vebco manufactures a product requiring 0,5 grams of platinum per unit. The cost

Question

Vebco manufactures a product requiring 0,5 grams of platinum per unit. The cost of platinum is approximately R360 per gram. Vebco maintains an ending inventory of platinum equal to 10 per cent of the following month's production. The following data were taken from the most recent quarterly production budget.

July

August

September

Planned product ion (units)

1 000

1 100

980

If each unit takes 2,5 direct labour hours to produce and Vebco's cost per labour hour is R15, determine the amount that should be budgeted for direct labour in September.

A.        R     5 880                     

B.         R 14 700

C.        R 18 375

D.         R 36 750                        

E.         R115 500

July

August

September

Planned product ion (units)

1 000

1 100

980

Explanation / Answer

Budgeted amount direct labour in September = 980*2.5*15= 36750 Option D is correct

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