### Understanding Direct Labor Costs: A Case Study**Scenario:**Depasquale Corporation is preparing its direct labor budget for the upcoming two months. The company’s production process requires each unit of output to use 0.61 direct labor-hours. The cost per direct labor-hour is set at $8.60. The production schedule plans for the manufacturing of 5,500 units in May and 5,900 units in June. The objective is to determine the total combined direct labor cost for these two months, assuming the workforce perfectly aligns with the labor requirements.**Calculation Objective:**Calculate the total direct labor cost for May and June.**Choices:**- $28,853.00- $59,804.40- $30,951.40- $29,902.20### Explanation1. **Calculating Direct Labor-Hours:** - **May:** 5,500 units * 0.61 direct labor-hours/unit = 3,355 direct labor-hours - **June:** 5,900 units * 0.61 direct labor-hours/unit = 3,599 direct labor-hours2. **Calculating Total Labor Cost:** - **May Cost:** 3,355 hours * $8.60/hour = $28,853.00 - **June Cost:** 3,599 hours * $8.60/hour = $30,951.403. **Total Combined Labor Cost:** - Total = $28,853.00 (May) + $30,951.40 (June) = $59,804.40Thus, the correct answer is **$59,804.40**.This example helps to understand how to budget for direct labor costs in a manufacturing setting by using unit production requirements and hourly rates.

Direct labor cost is based on the total direct labor hour used for the production of units and rate…

Depasquale Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.61 direct labor-hours. The direct labor rate is $8.60 per direct labor-hour. The production budget calls for producing 5,500 units in May and 5,900 units in June. If the direct labor work force is fully adjusted to the total direct labor-hours needed each month, what would be the total combined direct labor cost for the two months? Multiple Choice $28,853.00 $59,804.40 $30,951.40 $29,902.20

Depasquale Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.61 direct labor-hours. The direct labor rate is $8.60 per direct labor-hour. The production budget calls for producing 5,500 units in May and 5,900 units in June. If the direct labor work force is fully adjusted to the total direct labor-hours needed each month, what would be the total combined direct labor cost for the two months? Multiple Choice $28,853.00 $59,804.40 $30,951.40 $29,902.20

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 5EA: Sunrise Poles manufactures hiking poles and is planning on producing 4,000 units in March and 3,700...

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Concept explainers

Master Budget

A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.

Sales Budget and Selling

A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.

Question

### Understanding Direct Labor Costs: A Case Study

**Scenario:**
Depasquale Corporation is preparing its direct labor budget for the upcoming two months. The company’s production process requires each unit of output to use 0.61 direct labor-hours. The cost per direct labor-hour is set at $8.60. The production schedule plans for the manufacturing of 5,500 units in May and 5,900 units in June. The objective is to determine the total combined direct labor cost for these two months, assuming the workforce perfectly aligns with the labor requirements.

**Calculation Objective:**
Calculate the total direct labor cost for May and June.

**Choices:**
- $28,853.00
- $59,804.40
- $30,951.40
- $29,902.20

### Explanation

1. **Calculating Direct Labor-Hours:**
- **May:** 5,500 units * 0.61 direct labor-hours/unit = 3,355 direct labor-hours
- **June:** 5,900 units * 0.61 direct labor-hours/unit = 3,599 direct labor-hours

2. **Calculating Total Labor Cost:**
- **May Cost:** 3,355 hours * $8.60/hour = $28,853.00
- **June Cost:** 3,599 hours * $8.60/hour = $30,951.40

3. **Total Combined Labor Cost:**
- Total = $28,853.00 (May) + $30,951.40 (June) = $59,804.40

Thus, the correct answer is **$59,804.40**.

This example helps to understand how to budget for direct labor costs in a manufacturing setting by using unit production requirements and hourly rates.

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