Question

Direct Labor Cost Budget

Ace Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for July for the two rackets is as follows:

	Junior	Pro Striker
Production budget	7,900 units	21,200 units

Both rackets are produced in two departments, Forming and Assembly. The direct labor hours required for each racket are estimated as follows:

	Forming Department	Assembly Department
Junior	0.25 hour per unit	0.4 hour per unit
Pro Striker	0.3 hour per unit	0.7 hour per unit

The direct labor rate for each department is as follows:

Forming Department	$20 per hour
Assembly Department	$8 per hour

Prepare the direct labor cost budget for July.

Ace Racket Company
Direct Labor Cost Budget
For the Month Ending July 31
	Forming Department	Assembly Department
Hours required for production:
Junior
Pro Striker
Total
Hourly rate	x$	x$
Total direct labor cost	$	$

Answer 1

Answer-

Ace Racket Company
Direct Labor Cost Budget
For the month ending July 31
Department	Forming	Assembly
Hours required for production:
Junior	7900 units*0.25 hours per unit =1975 hours	7900 units*0.4 hours per unit =3160 hours
Pro Striker	21200 units*0.3 hours per unit =6360 hours	21200 units*0.7 hours per unit =14840 hours
Total hours (a)	8335	18000
Hourly rate (b)	$20	$8
Total direct labor cost (c=a*b)	166700	144000