Junior Pro Striker
Production budget 1,700 units 7,800 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 0.20 hour per unit 0.32 hour per unit
Pro Striker 0.24 hour per unit 0.50 hour per unit
The direct labor rate for each department is as follows:
Forming Department $17.00 per hour
Assembly Department $16.00 per hour
Prepare the direct labor cost budget for July 2014.
Answer:
ACE RACKET COMPANY
Direct Labor Cost Budget
For the Month Ending July 31, 2014
Forming
Department
Assembly
Department
Hours required for production:
Junior 340
1 5442
Pro Striker 1,8723 3,9004
Total 2,212 4,444
Hourly rate × $17.00 × $16.00
Total direct labor cost $37,604 $71,104
1 Junior: 0.20 hr. × 1,700 = 340 hrs.
2 Junior: 0.32 hr. × 1,700 = 544 hrs.
3 Pro Striker: 0.24 hr. × 7,800 = 1,872 hrs.
4 Pro Striker: 0.50 hr. × 7,800 = 3,900 hrs.