Question

Nevis' production data for a new deluxe product were taken from the most recent quarterly production budget:

	July	August	September
Planned production in units	1,000	1,100	980

In addition, Nevis produces 5,000 units a month of its standard product. It takes two direct labor hours to produce each standard unit and 2.25 direct labor hours to produce each deluxe unit. Nevis' cost per labor hour is $15. Direct labor cost for the quarter would be budgeted at:

		$553,950.
		$533,125.
		$547,750.
		$519,075.
		None of the answers is correct.

Answer 1

Answer is $553,950.

Working:

		July	August	September	Total
Standard Unit
Budgeted production units	A	5000	5000	5000	15000
Direct labor hours per unit	B	2	2	2	2
Direct labor hours required   (A X B )	C	10000	10000	10000	30000
Deluxe Unit
Budgeted production units	D	1000	1100	980	3080
Direct labor hours per unit	E	2.25	2.25	2.25
Direct labor hours required   (D X E )	F	2250	2475	2205	6930
Total budgeted Direct Labor Hours (C + F)	G	12250	12475	12205	36930
Direct labor rate per hour	H	$15.00	$15.00	$15.00	$15.00
Budgeted Direct Labor Cost (G X H)	I	183750	187125	183075	553950