Asked by Bryan Velasquez Beltran on May 03, 2024
Verified
The estimated direct labor cost for May is closest to:
A) $558,000
B) $33,480
C) $837,000
D) $279,000
Estimated Direct Labor Cost
The forecasted cost associated with the labor directly involved in the manufacturing of goods.
- Understand the impact of direct labor costs on the production budget.
Verified Answer
KP
Kayli PayneMay 09, 2024
Final Answer :
C
Explanation :
The direct labor cost per unit is calculated as follows:
Direct labor cost per unit = Total direct labor cost / Total units produced
= $837,000 / 279,000 units
= $3 per unit
The estimated direct labor cost for May is then calculated by multiplying the direct labor cost per unit by the estimated number of units to be produced in May:
Estimated direct labor cost for May = $3 per unit x 300,000 units
= $900,000
Therefore, the closest estimated direct labor cost for May is option C) $837,000.
Direct labor cost per unit = Total direct labor cost / Total units produced
= $837,000 / 279,000 units
= $3 per unit
The estimated direct labor cost for May is then calculated by multiplying the direct labor cost per unit by the estimated number of units to be produced in May:
Estimated direct labor cost for May = $3 per unit x 300,000 units
= $900,000
Therefore, the closest estimated direct labor cost for May is option C) $837,000.
Explanation :
The budgeted required production for May is computed as follows: 
*June sales of 13,800 units × 20% = 2,760 units
** May sales of 10,500 units × 20%= 2,100 units
The estimated direct labor cost for May is computed as follows:
*June sales of 13,800 units × 20% = 2,760 units** May sales of 10,500 units × 20%= 2,100 units
The estimated direct labor cost for May is computed as follows:
Learning Objectives
- Understand the impact of direct labor costs on the production budget.