Question

Lindburgh Company manufactures toy airplanes. Information on Lindburgh Company's labor costs follow:

Sales commissions	$5 per plane
Administration	$10,000 per month
Indirect factory labor	$3 per plane
Direct factory labor	$5 per plane

The following information applies to the upcoming month of July for Lindburgh Company:

Budgeted production	1,200 units
Budget sales	1,000 units

a. What amount of budgeted labor cost would appear in the July selling, general, and administrative expense budget?

b. What is Lindburgh’s budgeted factory labor cost for July?

Answer 1

a)

Sales commission ($5*1,000)	$            5,000
Administration	$          10,000
Amount of budgeted labor cost would appear in the july selling, general and administrative expense budget	$          15,000

b)

Indirect factory labour (1,200*$3)	$ 3,600
Direct factory labour (1,200*$5)	$ 6,000
Budgeted factory labour cost for july	$ 9,600