4. Sarusse, Inc, produces two products in a single plant utilizing two departmen

Question

4. Sarusse, Inc, produces two products in a single plant utilizing two departments: Shaping and standard Assembly. Direct labor hour and dollar requirements for 2010 are being projected using 2009 unit labor information. Departmental data and routing sequence information are shown below Product Shaping Assembly 0.4 0.6 S12 2D2 0.5 0.7 $9 Labor rate per hour Management has forecasted that 20,000 umits of product R2D2 and 70,000 units of product T3E3 must be produced during 2010. Prepare a direct labor budget for 2010 that shows the budgeted direct labor cost for each department and the company as a whole.

Explanation / Answer

DIRECT LABOR BUDGET SHAPING DEPARTMENT: R2D2 T3E3 TOTAL Finished units 20000 70000 Direct labor hours per unit 0.5 0.7 Total direct labor hours 10000 49000 Direct labor rate per hour $          9.00 $           9.00 Total direct labor cost $      90,000 $    441,000 $      531,000 ASSEMBLY DEPARTMENT: Finished units 20000 70000 Direct labor hours per unit 0.4 0.6 Total direct labor hours 8000 42000 Direct labor rate per hour $              12 $              12 Total direct labor cost $      96,000 $    504,000 $      600,000 TOTAL DIRECT LABOR COST $ 1,131,000 NOTE: Date for question 4 not provided.

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