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10 February, 04:42

Direct Labor Cost Budget Ace Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for July for the two rackets is as follows: Junior Pro Striker Production budget 1,500 units 6,200 units Both rackets are produced in two departments, Forming and Assembly. The direct labor hours required for each racket are estimated as follows:

Forming Department Assembly Department Junior 0.16 hour per unit 0.24 hour per unit

Pro Striker 0.20 hour per unit 0.30 hour per unit

The direct labor rate for each department is as follows:

Forming Department $18.00 per hour

Assembly Department $14.00 per hour

Required:

1. Prepare the direct labor cost budget for July 2016.

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Answers (1)
  1. 10 February, 07:58
    0
    The preparation of the direct labor budget is presented below:

    Explanation:

    The preparation of the direct labor budget is presented below:

    Direct labor cost budget

    For the month of July 2016

    Particulars Forming Department Assembly Department

    Production 1,500 units 6,200 units

    Hours required

    Junior 240 360

    Hours Required

    Pro 1,240 1,860

    Total Hours

    Department wise (A) 1,480 2,220

    Total Hourly rate (B) $18 $14

    Total Direct

    Labor Cost (A * B) $26,640 $31,080

    The computation is shown below:

    For Junior, it would be

    Forming = 0.16 * 1,500 = 240

    Assembly = 0.24 * 1,500 = 360

    For Pro, it would be

    Forming = 0.20 * 6,200 = 1,240

    Assembly = 0.30 * 6,200 = 1,860
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