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LBC Corporation makes and sells a product called Product WZ. Each unit of Product WZ requires 2.0 hours of direct labor at the rate of $16.00 per direct labor-hour. Management would like you to prepare a Direct Labor Budget for June. The company plans to sell 39,000 units of Product WZ in June. The finished goods inventories on June 1 and June 30 are budgeted to be 610 and 110 units, respectively. Budgeted direct labor costs for June would be:

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Answer:

Instructions are below.

Explanation:

Giving the following information:

Each unit of Product WZ requires 2.0 hours of direct labor at the rate of $16.00 per direct labor-hour.

The company plans to sell 39,000 units of Product WZ in June.

Beginning inventory= 610

Ending inventory= 110

First, we need to calculate the production for June:

Production= sales + desired ending inventory - beginning inventory

Production= 39,000 + 110 - 610

Production= 38,500 units

Direct labor budget:

Total direct labor hours= 38,500*2= 77,000 hours

Total direct labor cost= 77,000*16= $1,232,000

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