Pooler Corporation is working on its direct labor budget for the next two months
ID: 2462266 • Letter: P
Question
Pooler Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.15 direct labor-hours. The direct labor rate is $7.00 per direct labor-hour. The production budget calls for producing 6,500 units in April and 6,200 units in May. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 1,000 hours in total each month even if there is not enough work to keep them busy. What would be the total combined direct labor cost for the two months?
Explanation / Answer
the company is committed to paying its direct labor work force for at least 1,000 hours in total each month even if there is not enough work to keep them busy.
Total direct labour hours for two months=2*1,000=2,000
Total direct labour cost=2,000* $7.00 per direct labor-hour.=$14,000.