Fantastic Futons goes through two departments in the production process. Each fu

Question

Fantastic Futons goes through two departments in the production process. Each futon requires two direct labor hours in Department A and one hour in Department B. Labor cost is $8 per hour in Department A and $10 per hour in Department B. The labor capacity for a normal eight-hour shift for a month is 50,000 direct labor hours each for both Departments A and B. Overtime is paid at time and a half. What would be the budgeted direct labor cost for January, assuming a budgeted production of 30,000 units? A. $900,000 B. $780,000 C. $820,000 D. $420,000

Explanation / Answer

C. $820,000

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