Chapter 8, Problem 13E

(A)

To determine

Prepare the production budget and direct labor cost budget of Company L.

Explanation of Solution

The following table shows the production budget for D and 501 J.

Company L
Production Budget
For the Month Ending May 31
Particulars	Units
	D	501 J
Expected units to be sold	23,600	53,100
Add: Desired inventory, June 30	420	1,860
Total Units Required	24,020	54,960
Less: Estimated Inventory, June 1	(670)	(1,660)
Total Units To Be Produced	23,350	53,300

Table (1)

Conclusion

Therefore, the total units to be produced for “D” and 501 “J” are 23,350 and 53,300 respectively.

(B)

To determine

Prepare the direct labor cost budget of Company L.

Explanation of Solution

The following table shows the direct labor cost budget for inseam, outer-seam, pockets, and zipper.

Company L
Direct Labor Cost Budget
For the Month Ending May 31
Particulars	Inseam	Outer-seam	Pockets	Zipper
Minutes Required For Production:
D	42,030 (1)	46,700 (2)	14,010 (3)	28,020 (4)
501 J	47,970 (5)	74,620 (6)	47,970 (7)	31,980 (8)
Total Minutes (A)	90,000	121,320	61,980	60,000
Total Hours Required (B) = (A)/60	1,500	2,022	1,033	1,000
Hourly Rate (C)	$13	$13	$15	$15
Total (B) × (C)	$19,500	$26,286	$15,495	$15,000
Total Direct Labor Cost	76,281

Table (1)

Working Notes:

(1) Calculate the minutes required for the production of D in inseam.

  $\begin{array}{c}\text{Minutes required for production}\text{=}\frac{23,350}{10\text{pairs}}\times 18\text{min}\\ =42,030\text{mins}\end{array}$

(2) Calculate the minutes required for the production of D in outer-seam.

  $\begin{array}{c}\text{Minutes required for production}\text{=}\frac{23,350}{10\text{pairs}}\times 20\text{min}\\ =46,700\text{mins}\end{array}$

(3) Calculate the minutes required for the production of D in pockets.

  $\begin{array}{c}\text{Minutes required for production}\text{=}\frac{23,350}{10\text{pairs}}\times 6\text{min}\\ =14,010\text{mins}\end{array}$

(4) Calculate the minutes required for the production of D in zipper.

  $\begin{array}{c}\text{Minutes required for production}\text{=}\frac{23,350}{10\text{pairs}}\times 12\text{min}\\ =28,020\text{mins}\end{array}$

(5) Calculate the minutes required for the production of 501 J in inseam.

  $\begin{array}{c}\text{Minutes required for production}\text{=}\frac{53,300}{10\text{pairs}}\times 9\text{min}\\ =47,970\text{mins}\end{array}$

(6) Calculate the minutes required for the production of 501 J in outer-seam.

  $\begin{array}{c}\text{Minutes required for production}\text{=}\frac{53,300}{10\text{pairs}}\times 14\text{min}\\ =74,620\text{mins}\end{array}$

(7) Calculate the minutes required for the production of 501 J in pockets.

  $\begin{array}{c}\text{Minutes required for production}\text{=}\frac{53,300}{10\text{pairs}}\times 9\text{min}\\ =47,970\text{mins}\end{array}$

(8) Calculate the minutes required for the production of 501 J in zipper.

  $\begin{array}{c}\text{Minutes required for production}\text{=}\frac{53,300}{10\text{pairs}}\times 6\text{min}\\ =31,980\text{mins}\end{array}$

Therefore, the total direct labor cost is $76,281.