The Gerald Corporation makes and sells a single product called a Clop. Each Clop requires 1.1 direct labor-hours at $8.20 per direct labor-hour. The direct labor workforce is fully adjusted each month to the required workload. The company is preparing a Direct Labor Budget for the first quarter of the year. If the company has budgeted to produce 20,000 Clops in January, then the budgeted direct labor cost for January is:
A)$164,000
B)$180,400
C)$172,200
D)$195,600

Question

Quizplus · Accepted Answer

The direct labor cost per unit can be calculated as follows:
1.1 direct labor-hours per Clop x $8.20 per direct labor-hour = $9.02 per Clop
The total direct labor cost for January can be calculated as follows:
20,000 Clops x $9.02 per Clop = $180,400
Therefore, the budgeted direct labor cost for January is $180,400.

The Gerald Corporation Makes and Sells a Single Product Called