Pooler corporation is working on its direct labor budget for the next two months. each unit of output requires 0.70 direct labor-hours. the direct labor rate is $10.60 per direct labor-hour. the production budget calls for producing 7,600 units in april and 7,400 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?

$ 116,176

Explanation:

Given:

Direct labor hours required by each unit = 0.70

Direct labor rate = $ 10.60 per direct labor-hour

Number of units to be produced in April = 7,600 units

Number of units to be produced in May = 7,400 units

Minimum labor hours per month for which the labor is paid = 5,480 hours

Now,

Labor hour for the month of April

= Number of units to be produced in April × Direct labor hours required

= 7,600 × 0.70

Labor hour for the month of April = 5320 hours

and,

Labor hour for the month of May

= Number of units to be produced in May × Direct labor hours required

= 7,400 × 0.70

Labor hour for the month of April = 5180 hours

since, the direct labor hour hour required each month is less than the minimum labor hour for which the labors will be paid i.e 5,480 hours

thus,

The total direct labor cost for 2 months will be

= (Number of Units for April + Number of Units for May ) × Labor Rate

or

= (5480 + 5480) × $ 10.60

or

The total direct labor cost for 2 months =  $ 116,176

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