# Solved Question: Tangshang Industries production budget from the 2nd quarter of 2018

## Description

Question:

Tangshang Industries production budget from the 2nd quarter of 2018, projected the following amounts of units to be produced:

April 1,000 units

May    1,200 units

June    1,250 units

Each unit requires 2 parts of component A and 3 parts of component B. Component A cost is \$1.25 per unit and component B cost is \$.80 per unit.

Each unit requires the following labor:

2 hours in the processing department

1 hour in the assembly department

Processing department labor rate is \$4/hour

Assembly department labor rate is \$6/hour

Using the information from the production budget of Tangshang Industries

A. Calculate Total Direct Labor Cost in the processing department for the quarter April – June 2018.

B. Calculate Total Direct Labor Cost for June 2018.

C. Calculate Total Direct Labor Cost for the quarter April – June 2018.

 April May June Quarter No of budgeted units 1,000 1,200 1,250 3,450 x Processing hours per unit 2 2 2 2 Total processing labor hours 2,000 2,400 2,500 6,900 x Processing labor cost per hour \$ 4 \$ 4 \$ 4 \$ 4 Total processing labor cost \$ 8,000 \$ 9,600 \$ 10,000 \$ 27,600 Assembling hours per unit 1 1 1 1 Total assembling labor hours 1,000 1,200 1,250 3,450 x Assembling cost per hour \$ 6 \$ 6 \$   6 \$ 6 Total assembling labor cost \$ 6,000 \$ 7,200 \$   7,500 \$   20,700 Total direct labor cost \$ 14,000 \$ 16,800 \$ 17,500 \$   48,300

A) Total direct labor cost for processing department in the quarter

= \$ 8,000 + \$ 9,600 + \$ 10,000 = \$ 27,600

B) Total direct labor cost for June = Labor cost in processing + labor cost in assembling

= \$ 10,000 + \$ 7,500 = \$ 17,500

C) Total Direct Labor Cost for the quarter = Labor cost in processing for the quarter + labor cost in assembling for the quarter

= (\$ 8,000 + \$ 9,600 + \$ 10,000) + (\$ 6,000 + \$ 7,200 + \$ 7,500)

= \$ 27,600 + \$ 20,700 = \$ 48,300

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