Question

MC Qu. 9-70 Nevis' production data for a new deluxe...

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

Planned production in units

July August September

700 800 680

In addition, Nevis produces 4,400 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 $16. Direct labor cost for the quarter would be budgeted at:

Multiple Choice

• $471,405.
• $480,055.
• $500,080.
• $500,880.
• None of the answers is correct.

Answer 1

For Deluxe
Total production of delux = 700+800+680 =2180
Number of hours required =2180*2.25 hr = 4905 hrs
Labor cost = 4905*$16 = 78480
For Navis
Total production of delux = 4400 units *3 =13200
Number of hours required =13200*2 hr = 26400 hrs
Labor cost = 26400*$16 = 422400
Total budgeted labor cost = $78480+422400
=$500880
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