Asked by Sameeha Riptee on May 27, 2024
Verified
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: 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?
A) $198,000
B) $158,400
C) $187,200
D) $234,000
Direct Labor
The labor costs of employees who are directly involved in the production of goods, an element of production costs.
Master Budget
A comprehensive financial plan that includes all of a company's budgets and financial plans.
Hourly Cost
The expense incurred for each hour of work performed, often used to calculate labor costs or pricing for services.
- Learn the foundational concepts and computational procedures necessary for the development of a direct labor budget.
Verified Answer
Number of units = Total yards of cloth / Yards of cloth per unit
Number of units = 66,000 / 2.2
Number of units = 30,000
Next, we can calculate the total hours of direct labor required as follows:
Total hours of direct labor = Number of units x Direct labor hours per unit
Total hours of direct labor = 30,000 x 0.8
Total hours of direct labor = 24,000
Finally, we can calculate the cost of direct labor as follows:
Cost of direct labor = Total hours of direct labor x Hourly cost of direct labor
Cost of direct labor = 24,000 x $18
Cost of direct labor = $432,000
Therefore, the correct answer is C) $187,200.
Learning Objectives
- Learn the foundational concepts and computational procedures necessary for the development of a direct labor budget.
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