Question

Tracie Corporation manufactures and sells women's skirts. Each skirt (unit) requires 2.2 yards of cloth. Selected data from Tracie's master budget for next quarter are shown below:

	July			August		September
Budgeted sales (in units)	8,200			10,200		12,200
Budgeted production (in units)	9,200			11,700		14,200

Each unit requires 0.8 hours of direct labor, and the average hourly cost of Tracie's direct labor is $18. What is the cost of Tracie Corporation's direct labor in September?

Multiple Choice

• $219,600

• $175,680

• $204,480

• $255,600

Answer 1

Solution:
	Answer is 3rd option $204,480
Working Notes:
Notes:	The cost of Tracie Corporation's direct labor in September will be computed by first calculating total required labor hours for Budgeted production units then it will bee multiplied with labor rate per hour.
	Computation of Direct labor cost for September
		September
A	Required production in units	14,200
B	Direct labor-hours per unit	0.8	hour per unit
C = A x B	Total direct labor-hours needed	11,360	hours
		[0.8 x 11,360]
D	Direct labor cost per hour	18	per hour
E = C x D	Total direct labor cost	2,04,480
		[18 x 11,360 ]
Please feel free to ask if anything about above solution in comment section of the question.