Prepare the direct labor cost budget for July.
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.
Direct Labor Cost Budget
Ace Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for July for the two rackets is as follows:
| Junior | Pro Striker | |
| Production budget | 8,900 units | 21,000 units |
Both rackets are produced in two departments, Forming and Assembly. The direct labor hours required for each racket are estimated as follows:
| Forming Department | Assembly Department | |
| Junior | 0.25 hour per unit | 0.40 hour per unit |
| Pro Striker | 0.35 hour per unit | 0.70 hour per unit |
The direct labor rate for each department is as follows:
| Forming Department | $18.00 per hour |
| Assembly Department | $11.00 per hour |
Prepare the direct labor cost budget for July.
| Ace Racket Company | ||
| Direct Labor Cost Budget | ||
| For the Month Ending July 31 | ||
| Forming Department | Assembly Department | |
| Hours required for production: | ||
| Junior | fill in the blank 1 | fill in the blank 2 |
| Pro Striker | fill in the blank 3 | fill in the blank 4 |
| Total | fill in the blank 5 | fill in the blank 6 |
| Hourly rate | x$fill in the blank 7 | x$fill in the blank 8 |
| Total direct labor cost | $fill in the blank 9 | $fill in the blank 10 |
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