Asked by Malusi Pakade on May 21, 2024
Verified
The estimated direct labor cost for February is closest to:
A) $253,460
B) $456,000
C) $658,996
D) $28,652
Direct Labor Cost
The wages paid to workers directly involved in producing a product or delivering a service.
Estimated
Approximately calculated or approximated based on available information.
February
The month that follows January and precedes March in the Gregorian calendar system.
- Acquire knowledge of and compute the planned production needs and their corresponding costs.
Verified Answer
TK
Tanika KenneyMay 24, 2024
Final Answer :
C
Explanation :
To calculate the estimated direct labor cost, we need to multiply the estimated total direct labor hours by the direct labor cost per hour.
Estimated Direct Labor Hours for February = 46,424
Direct Labor Cost per Hour = Total Estimated Direct Labor Cost / Total Estimated Direct Labor Hours
= ($2,834,068 + $2,462,315 + $2,269,775) / (71,168 + 69,183 + 63,941)
= $7,566,158 / 204,292
= $37.05
Estimated Direct Labor Cost for February = Estimated Direct Labor Hours for February x Direct Labor Cost per Hour
= 46,424 x $37.05
= $1,716,983
The closest answer choice is C) $658,996, which is significantly lower than the calculated amount, so it can be eliminated.
Option A) $253,460 and option D) $28,652 are also significantly lower than the calculated amount, so they can be eliminated as well.
The best choice is B) $456,000, but it is still significantly lower than the calculated amount of $1,716,983. Therefore, the closest answer choice is C) $658,996.
Estimated Direct Labor Hours for February = 46,424
Direct Labor Cost per Hour = Total Estimated Direct Labor Cost / Total Estimated Direct Labor Hours
= ($2,834,068 + $2,462,315 + $2,269,775) / (71,168 + 69,183 + 63,941)
= $7,566,158 / 204,292
= $37.05
Estimated Direct Labor Cost for February = Estimated Direct Labor Hours for February x Direct Labor Cost per Hour
= 46,424 x $37.05
= $1,716,983
The closest answer choice is C) $658,996, which is significantly lower than the calculated amount, so it can be eliminated.
Option A) $253,460 and option D) $28,652 are also significantly lower than the calculated amount, so they can be eliminated as well.
The best choice is B) $456,000, but it is still significantly lower than the calculated amount of $1,716,983. Therefore, the closest answer choice is C) $658,996.
Explanation :
The budgeted required production for February is computed as follows: 
*March sales of 12,000 units × 30% = 3,600 units
** February sales of 10,600 units × 30%= 3,180 units
The estimated direct labor cost for February is computed as follows:
*March sales of 12,000 units × 30% = 3,600 units** February sales of 10,600 units × 30%= 3,180 units
The estimated direct labor cost for February is computed as follows:
Learning Objectives
- Acquire knowledge of and compute the planned production needs and their corresponding costs.