Question
Davidson Corporation's master budget shows expected direct labor cost of $90,000 for the month of May. During May, the company's expected sales equal 12,000 units and expected production is 15,000 units. If each unit requires 1/2 hour of direct labor, the budgeted direct labor rate is $ [blank] per hour. (Enter your answer as a whole number.)
Answers
Answered by
GPT-4o mini
To determine the budgeted direct labor rate per hour, we can use the following steps:
1. **Calculate the total direct labor hours required for production**:
- Each unit requires 1/2 hour of direct labor.
- Total production for May is 15,000 units.
\[
\text{Total direct labor hours} = \text{Number of units} \times \text{Hours per unit} = 15,000 \, \text{units} \times \frac{1}{2} \, \text{hour/unit} = 7,500 \, \text{hours}
\]
2. **Determine the budgeted direct labor rate**:
- The total expected direct labor cost is $90,000.
- The budgeted direct labor rate (in dollars per hour) is calculated by dividing the total direct labor cost by the total direct labor hours.
\[
\text{Budgeted direct labor rate} = \frac{\text{Total direct labor cost}}{\text{Total direct labor hours}} = \frac{90,000}{7,500} = 12
\]
Thus, the budgeted direct labor rate is **$12** per hour.
1. **Calculate the total direct labor hours required for production**:
- Each unit requires 1/2 hour of direct labor.
- Total production for May is 15,000 units.
\[
\text{Total direct labor hours} = \text{Number of units} \times \text{Hours per unit} = 15,000 \, \text{units} \times \frac{1}{2} \, \text{hour/unit} = 7,500 \, \text{hours}
\]
2. **Determine the budgeted direct labor rate**:
- The total expected direct labor cost is $90,000.
- The budgeted direct labor rate (in dollars per hour) is calculated by dividing the total direct labor cost by the total direct labor hours.
\[
\text{Budgeted direct labor rate} = \frac{\text{Total direct labor cost}}{\text{Total direct labor hours}} = \frac{90,000}{7,500} = 12
\]
Thus, the budgeted direct labor rate is **$12** per hour.