Capati Corporation is working on its direct labor budget for the next two months

Question

Capati Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.55 direct labor-hours. The direct labor rate is $9.50 per direct labor-hour. The production budget calls for producing 1,600 units in April and 1,500 units in May. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 960 hours in total each month even if there is not enough work to keep them busy.

Construct the direct labor budget for the next two months.

Construct the direct labor budget for the next two months.

Explanation / Answer

April may Units produced 1600 1500 Hours required .55 .55 Direct labor hours required 880 825 Hours paid to workers [a] 960 960 Rate per hour [b] 9.5 9.5 Labor cost     [a*b] 9120 9120

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