Asked by Gilberto Camacho on Jun 08, 2024
Verified
The estimated direct labor cost for November is closest to:
A) $320,000
B) $182,620
C) $456,550
D) $19,850
Estimated Direct Labor Cost
The anticipated cost of labor directly associated with the production of goods or services, typically estimated before production begins.
- Comprehend the influence of direct labor expenses on the manufacturing budget.
Verified Answer
MM
Mohammad Mahdi MalekiJun 08, 2024
Final Answer :
C
Explanation :
The budgeted required production for November is computed as follows: *December sales of 11,300 units × 20% = 2,260 units
** November sales of 7,100 units × 20%= 1,420 units
The estimated direct labor cost for November is computed as follows: Reference: CH08-Ref5
Michard Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:
a.The budgeted selling price per unit is $125.Budgeted unit sales for April, May, June, and July are 7,600, 10,500, 13,800, and 12,900 units, respectively.All sales are on credit.
b.Regarding credit sales, 20% are collected in the month of the sale and 80% in the following month.
c.The ending finished goods inventory equals 20% of the following month's sales.
d.The ending raw materials inventory equals 30% of the following month's raw materials production needs.Each unit of finished goods requires 4 pounds of raw materials.The raw materials cost $2.00 per pound.
e.Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in the following month.
f.The direct labor wage rate is $25.00 per hour.Each unit of finished goods requires 3.0 direct labor-hours.
g.The variable selling and administrative expense per unit sold is $3.40.The fixed selling and administrative expense per month is $80,000.
** November sales of 7,100 units × 20%= 1,420 units
The estimated direct labor cost for November is computed as follows: Reference: CH08-Ref5
Michard Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:
a.The budgeted selling price per unit is $125.Budgeted unit sales for April, May, June, and July are 7,600, 10,500, 13,800, and 12,900 units, respectively.All sales are on credit.
b.Regarding credit sales, 20% are collected in the month of the sale and 80% in the following month.
c.The ending finished goods inventory equals 20% of the following month's sales.
d.The ending raw materials inventory equals 30% of the following month's raw materials production needs.Each unit of finished goods requires 4 pounds of raw materials.The raw materials cost $2.00 per pound.
e.Regarding raw materials purchases, 30% are paid for in the month of purchase and 70% in the following month.
f.The direct labor wage rate is $25.00 per hour.Each unit of finished goods requires 3.0 direct labor-hours.
g.The variable selling and administrative expense per unit sold is $3.40.The fixed selling and administrative expense per month is $80,000.
Learning Objectives
- Comprehend the influence of direct labor expenses on the manufacturing budget.