Holt Products manufactures desk-top computers.Management has determined that each computer has a standard labour cost of $48.00 when 4 hours of labour at a cost of $12.00 per hour are used.The static budget for the month of April showed an estimated production of 3900 computers.During April,4200 computers were actually produced.The actual direct labour cost for each computer was $57.60 when 4.5 hours of labour at a cost of $12.80 per hour was used.What should be the total direct labour cost according to Holt's flexible budget for April?
A) $224 640
B) $187 200
C) $201 600
D) $241 920

Question

Quizplus · Accepted Answer

To calculate the flexible budget, we need to first calculate the standard labour cost per unit:

Standard labour cost = 4 hours x $12 per hour = $48

Next, we need to adjust the labour cost per unit for the actual amount of labour used:

Adjusted labour cost = 4.5 hours x $12.80 per hour = $57.60

The flexible budget for direct labour cost can now be calculated:

Flexible budget = Actual number of units produced x Adjusted labour cost per unit
Flexible budget = 4,200 x $57.60 = $241,920

Therefore, the total direct labour cost according to Holt's flexible budget for April is $201,600 (Option C).

Holt Products Manufactures Desk-Top Computers