The production of each TV set requires 1.5 direct labour hours. The average cost of each direct labour hour is $10.50. If scheduled production for May is 2000 TVs, what will be the total budgeted cost of direct labour?
A) $3000
B) $21 000
C) $31 500
D) none of the above are correct

Question

Quizplus · Accepted Answer

To calculate the budgeted cost of direct labour, we need to multiply the number of TV sets to be produced by the direct labour hours required to produce one TV set, and then multiply that figure by the average cost of each direct labour hour.

Direct labour hours required per TV set = 1.5 hours 
Average cost of each direct labour hour = $10.50

Budgeted cost of direct labour = (Direct labour hours per TV set x Number of TV sets) x Average cost of direct labour hour

Budgeted cost of direct labour = (1.5 x 2000) x 10.50 
Budgeted cost of direct labour = 30,000 x 10.50 
Budgeted cost of direct labour = $315,000

Therefore, the best choice is C.

The Production of Each TV Set Requires 1