Detmer Enterprises has the following budgeted sales: Budgeted Sales in Units Jun

Question

 Detmer Enterprises has the following budgeted sales:                    Budgeted Sales in Units June                   6,800 units July                   5,100 units August                 4,400 units September              7,300 units  Past experience has shown that the ending finished goods inventory for each month should be equal to 20% of the next month's expected sales in units. Additionally, it is known that every unit produced requires four direct labor hours to make and direct laborers are paid $15 per hour.  Assume that Detmer pays 65% of its direct labor in the same month the employee works, pays 30% of its direct labor in the month after the employee works, and the final 5% is paid two months after the employee works.  Calculate the budgeted cash payments for direct labor for the month of August.

Explanation / Answer

June July August Budgeted Sales in Units 6800 5100 4400 Add: Desired ending finished goods inventory 1020 880 1460 Total needs 7820 5980 5860 Less: Beginning finished goods inventory 1360 1020 880 Required production in units 6460 4960 4980 Direct labor hours per unit 4 4 4 Total direct labor hours 25840 19840 19920 Wager rate per hour 15 15 15 Total direct labor cost 387600 297600 298800 Budgeted cash payment for direct labor=(387600*5%)+(297600*30%)+(298800*65%)= $302880

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.