Sthilaire Corporation is working on its direct labor budget for the next two mon
ID: 2582879 • Letter: S
Question
Sthilaire Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.44 direct labor-hours. The direct labor rate is $9.10 per direct labor-hour. The production budget calls for producing 2,000 units in April and 1,900 units in May. 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 960 hours in total each month even if there is not enough work to keep them busy.
Required:
Prepare the direct labor budget for the next two months. (Round "labor-hours per unit" & "labor cost per hour" answers to 2 decimal places.)
April May Required production in units Direct labor-hours per unit Total direct labor-hours needed Total direct labor-hours paid Direct labor cost per hour Total direct labor costExplanation / Answer
Solution:
Direct labor budget
April
May
Required Production in units
2000
1900
Direct labor hours per unit
0.44
0.44
Total direct labor hours needed
880
836
Total direct labor hours paid
960
960
Direct labor cost per hour
$9.10
$9.10
Total direct labor cost
$8,736
(960*$9.10)
$8,736
(960*$9.10)
Note -- company is committed to paying its direct labor work force for at least 960 hours in total each month even if there is not enough work to keep them busy.
Hence in both the months total direct labor hours worked are less than 960 hours. So the company will pay direct labor cost for 960 hours.
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April
May
Required Production in units
2000
1900
Direct labor hours per unit
0.44
0.44
Total direct labor hours needed
880
836
Total direct labor hours paid
960
960
Direct labor cost per hour
$9.10
$9.10
Total direct labor cost
$8,736
(960*$9.10)
$8,736
(960*$9.10)
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