The company expects to perform 25 setups in May.
-Refer to Figure 11-6. Prepare a salary budget for the activity, moving materials. Assume that the labor market does not permit the hiring of part-time forklift operators.
A) $980,000
B) $1,008,000
C) $905,000
D) $1,135,000
E) $760,000

Question

The company expects to perform 25 setups in May.
-Refer to Figure 11-6. Prepare a salary budget for the activity, moving materials. Assume that the labor market does not permit the hiring of part-time forklift operators.
A) $980,000 
B) $1,008,000 
C) $905,000 
D) $1,135,000 
E) $760,000

Quizplus · Accepted Answer

The total cost of forklift operators' salaries is calculated as follows:
$40,000 per year per operator × 20 operators = $800,000 per year
$800,000 per year ÷ 12 months = $66,667 per month
25 setups × 2 forklift operators per setup = 50 forklift operators needed per month
$66,667 × 50 operators = $3,333,350 total monthly salary cost for forklift operators
However, since the problem only asks for the salary budget for the activity of moving materials, we need to exclude the setup cost of $21,250 per setup (as stated in the problem).
Therefore, the salary budget for the activity of moving materials is:
$3,333,350 total monthly salary cost - ($21,250 setup cost × 25 setups) = $1,008,125
Rounding down, the answer is B, $1,008,000.

The Company Expects to Perform 25 Setups in May