Question

Refer to the Carteret Inc. information below. Carteret Inc. manufactures hammocks under various brand names. The company sells most of its hammocks in the second quarter of each year. Their production budget for the second quarter shows the following number of hammocks needs to be produced: April 6000 units May 10 000 units June 15 000 units Each unit requires 30 feet of cotton rope cord which costs $0.50 per foot. The company has determined that it needs 20 per cent of next month’s raw material needs on hand at the end of each month. In addition, each hammock requires 45 minutes of direct labour for assembly and inspection at a cost of $0.25 per minute. The company currently applies manufacturing overhead to production at the rate of $8 per direct labour hour.

The total cost of direct labour and manufacturing overhead for the month of May is: $172 500 $168 750 $192 500 $82 500

Answer 1

Answer- The total cost of direct labour and manufacturing overhead for the month of May is = $172500.

Explanation- Total cost of direct labour and manufacturing overhead = $112500+$60000

= $172500

Where- Total cost of direct labor = (10000 units*45 minutes per unit)*$0.25 per minute

= $112500

Where- Total cost of manufacturing overhead = {(10000 units*45 minutes per unit)/60 minutes per hour}*$8 per direct labor hour

= 7500 labor hours*$8 per labor hour

= $60000