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.
Answer:
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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