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McCourt Inc. manufacturers a unique product. The company’s controller has prepared the following static budget for...

  1. McCourt Inc. manufacturers a unique product. The company’s controller has prepared the following static budget for the month of February:

    Estimated production                                             300 units
    Direct labour per unit                                                  1 hour
    Direct labour required for estimated production    300 hours
    Average direct labour rate per hour                                $10
    Estimated direct labour cost                                        $3000

    Actual production during February was 275 units and actual direct labour cost was $2900.

    If McCourt prepares a flexible budget for February, direct labour cost is estimated to be:

    $3165

    $2900

    $3000

    $2750
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Answer #1
Estimated direct labor cost $3,000
Estimated production units 300 units
Estimated direct labor cost per unit $10
Actual production units 275 units
Flexible budget ( 275 units x $ 10 ) $2,750
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