Question

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	7,500 units	22,700 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	0.20 hour per unit	0.50 hour per unit
Pro Striker	0.35 hour per unit	0.75 hour per unit

The direct labor rate for each department is as follows:

Forming Department	$16.00 per hour
Assembly Department	$9.00 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

Answer 1

Ace Racket Company
Direct Labor Cost Budget
For the Month Ending July 31
	Forming Department	Assembly Department
Hours required for production:
Junior	7,500 X 0.20 = 1,500	7,500 X 0.50 = 3,750
Pro Striker	22,700 X 0.35 = 7,945	22,700 X 0.75 = 17,025
Total	9,445	20,775
Hourly rate	x $16	x $9
Total direct labor cost	$151,120	$186,975

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