Question

Shadee Corp. expects to sell 590 sun visors in May and 340 in June. Each visor sells for $25. Shadee’s beginning and ending finished goods inventories for May are 65 and 50 units, respectively. Ending finished goods inventory for June will be 60 units.

Suppose that each visor takes 0.90 direct labor hours to produce and Shadee pays its workers $11 per hour.

Determine Shadee's budgeted direct labor cost for May and June. (Do not round your intermediate values. Round your answers to 2 decimal places.)

Answer 1

Solution

	May	June
Labor cost	$ 5,692.50	$ 3,465.00

Working

Production budget
	May	June
Expected units to be sold	590	340
Add: Desired ending quantity	50	60
Total	640	400
Less: Beginning inventory	65	50
Total units to be produced	575	350

.

Direct labor budget
	May	June
Total units to be produced	575	350
Multiplied by : hours per unit	0.9	0.9
Total hours needed	517.5	315
Multiplied by : Cost per hour	$        11.00	$        11.00
Labor cost	$ 5,692.50	$ 3,465.00