The budgeted production of Capricorn, Inc. is 14 comma 000 units per month. Each unit requires 40 minutes of direct labor to complete. The direct labor rate is $ 90.00 per hour. Calculate the budgeted cost of direct labor for the month. (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.)

Question

Business

Kylee Green

1 July, 06:43

The budgeted production of Capricorn, Inc. is 14 comma 000 units per month. Each unit requires 40 minutes of direct labor to complete. The direct labor rate is $ 90.00 per hour. Calculate the budgeted cost of direct labor for the month. (Round any intermediate calculations to the nearest cent and your final answer to the nearest dollar.)

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Linda · Answer 1

= $560,000.00

Explanation:

Budgeted labour cost = Budgeted hours * standard labour rate/hour

The labour rate is given as $90 / hour

Budgeted hours = Budgeted production units * Standard hours

Standard hours is the amount of time worker is expected to complete a unit of a product. It is given as 40 minutes in this question.

Budgeted production units = 14,000 units

So budgeted hours = (40 * 14,000) minutes/60 minutes

= 9333.33 hours

Note: we needed to divide by 60 to convert the total minutes into hours

Budgeted cost of direct labor for the month

= 9,333.33 * $60

= $560,000.00