Question

Stevenson Publishers Inc. budgeted production of 33,000 diaries in 2016. Each diary requires assembly. Assume that 15 minutes are required to assemble each diary.

If assembly labor costs $10.5 per hour, determine the direct labor cost budget for 2016. Do not round your intermediate calculations but, if required, round your final answer to the nearest dollar.

Answer 1

Answer)

Calculation of Budgeted Direct Labour Cost

Budgeted Labour Cost = (Total Budgeted Direct Labour hours required in Assembly of budgeted production X Direct Labour cost per hour)

                                                 = (8,250 direct labour hours X $ 10.50 per direct labour hour)

                                                 = $ 86,625

Conclusion: Therefore, Budgeted direct labour cost to assemble budgeted production of 33,000 diaries is $ 86,625.

Working Note:                 

Calculation of Total budgeted direct labour hours required to assemble budgeted Production

Budgeted Production = 33,000 diaries

Direct labour time required to assemble each diary = 15 minutes

Since each hour has 60 minutes,

Therefore,

Direct labour time required to assemble each diary will be = (15/60) hours

Direct labour time required to assemble each diary = 0.25 hour              

Direct labour time required to produce 33,000 diaries = 33,000 diaries X 0.25 labour hour per diary

                                                                                                  = 8,250 direct labour hours

Therefore, direct labour time required to assemble 33,000 diaries will be 8,250 hours.