Question

Webster Corporation is preparing a master budget for the first quarter of the year. The company...

Webster Corporation is preparing a master budget for the first quarter of the year. The company budgets production of 2,900 units in January, 2,710 units in February and 3,290 units in March. Each unit requires 0.6 hours of direct labor. The direct labor rate is $12 per hour. Compute the budgeted direct labor cost for the first quarter budget.

Multiple Choice

  • $58,536.

  • $64,080.

  • $106,800.

  • $97,560.

  • $53,400.

Business   Accounting   
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Homework Answers

Answer #1

Solution:

Here,

Total Units to be produced in the first quarter of the year = ( 2900 + 2710 + 3290 ) units

= 8900 units

Direct labor hours required per unit = 0.6 hr

Direct labor hours required for production = Total units to be produced * direct labor hours per unit

= 8900 units * 0.6 hr

= 5340 hrs

Direct Labor rate per hour = $12

Budgeted Direct Labor Cost = Direct labor hrs for production * Direct labor rate per hr

= 5340 hrs * $12

= $64,080

Therefore,Webster corporation's budgeted direct labor cost for the first quarter budget is $64,080

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