Question

Direct Labor Cost Budget

Lidell Publishers Inc. budgeted production of 60,000 diaries in 2016. Each diary requires assembly. Assume that five minutes are required to assemble each diary.

If assembly labor costs $15 per hour, determine the direct labor cost budget for 2016. Do not round your intermediate calculations but, if required, round your final answer to the nearest dollar.

Cash Budget

McMichael Publishers Inc. collects 75% of its sales on account in the month of the sale and 25% in the month following the sale.

If sales on account are budgeted to be $333,000 for April and $263,000 for May, what are the budgeted cash receipts from sales on account for May?
$

Answer 1

The total direct labor minutes for 2016 = 60,000 diaries * 5 minuts for each diary

= 300,000

The total direct labour hours = 300,000 minutes / 60 = 5,000

The direct labor cost budget for 2016 = 5,000 direct labour hours * $15 per hour

= $75,000

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Budgeted cash receipts from sales on account for May = (May sales on account*75%) + (April sales on account*25%)

= ($263,000*75%) + ($333,000*25%)

= $197,250 + $83,250

= $280,500