LBC Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 4.1 hours of direct labor at the rate of $20.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June. The company plans to sell 28,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 500 and 80 units, respectively. Budgeted direct labor costs for June would be:

$2,261,560

Explanation:

Budgeted finished goods inventory (June 1) = beginning = 500 units

Budgeted finished goods inventory (June 30) = ending =80 units

Planned sales (June) = 28,000 units

Direct labor hours = 4.1 per direct labor hour

Direct labor rate = $20 / direct labor rate

June production :

Planned sales + ending inventory - beginning inventory

(28000 + 80 - 500) units

= 27,580 units

Total Direct labor hour required for production :

27,580 × 4.1 = 113,078 labor hours

Cost of production:

Total direct labor hour × rate per hour

113,078 × $20 = $2,261,560

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