Pooler Corporation is working on its direct labor budget for the next two months
ID: 2519149 • Letter: P
Question
Pooler Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.74 direct labor-hours. The direct labor rate is $11.70 per direct labor-hour. The production budget calls for producing 6,600 units in April and 6,400 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 5,480 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
May June Required production 6600 6400 Direct labor-hours per unit 0.74 0.74 Direct labor-hours required 4884 4736 Direct labor-hours to be paid 5480 5480 Direct labor rate 11.7 11.7 Total direct labor cost 64116 64116 Total combined direct labor cost=64116+64116= $128232