Horton Company produces and sells two products: round and square tables. In August 20x0, the budget projected the following for 20x1:
The tables are manufactured using the following direct materials:

Budgeted data for 20x1 direct materials are:

Budgeted data for 20x1 Direct labour and overhead are:

Direct labour costs for 20x1 are:
A)$312,000
B)$444,000
C)$512,000
D)$565,000

Question

Horton Company produces and sells two products: round and square tables. In August 20x0, the budget projected the following for 20x1: 
The tables are manufactured using the following direct materials:

Budgeted data for 20x1 direct materials are:

Budgeted data for 20x1 Direct labour and overhead are:

Direct labour costs for 20x1 are:
A)$312,000 
B)$444,000 
C)$512,000 
D)$565,000

Quizplus · Accepted Answer

To calculate the direct labor costs for 20x1, we need to determine the total hours required to produce the round and square tables and then multiply it by the hourly rate.

The budgeted production for round tables is 15,000, and it requires 2 hours of direct labor per table. So, the total direct labor hours required for round tables would be 15,000 x 2 = 30,000 hours.

Similarly, the budgeted production for square tables is 10,000, and it requires 3 hours of direct labor per table. So, the total direct labor hours required for square tables would be 10,000 x 3 = 30,000 hours.

Therefore, the total direct labor hours required for both products would be 30,000 + 30,000 = 60,000 hours.

The budgeted direct labor rate is $7.40 per hour, so the total direct labor costs would be: 
60,000 x $7.40 = $444,000.

Hence, the correct answer is B).

Horton Company Produces and Sells Two Products: Round and Square