Question

Flagstaff Company has budgeted production units of 9,800 for July and 10,000 for August. The direct labor requirement per unit is 0.40 hours. Labor is paid at the rate of $20 per hour. The total cost of direct labor budgeted for the month of August is: Multiple Choice $78,400. $4,000. $80,000. $3,920. $158,400.

Answer 1

Answer: $80,000

Explanation:

There are 10,000 units budgeted for August.

The number of hours it takes to complete a single unit is 0.40 hours.

Each hour is going to cost $20.

Budgeted direct labor for August is:

= Units budgeted * Number of hours required per unit * Cost of labor

= 10,000 * 0.40 * 20

= $80,000