Question

Production and Direct Labor Cost Budgets

Two-Leg Company manufactures slacks and jeans under a variety of brand names, such as Dockers^® and 501 Jeans^®. Slacks and jeans are assembled by a variety of different sewing operations. Assume that the sales budget for Dockers and 501 Jeans shows estimated sales of 21,610 and 38,720 pairs, respectively, for May. The finished goods inventory is assumed as follows:

	Dockers		501 Jeans
May 1 estimated inventory	970		1,090
May 31 desired inventory	360		1,370

Assume the following direct labor data per 10 pairs of Dockers and 501 Jeans for four different sewing operations:

	Direct Labor per 10 Pairs
	Dockers		501 Jeans
Inseam	21	minutes	14	minutes
Outerseam	25		17
Pockets	8		10
Zipper	12		7
Total	66	minutes	48	minutes

a. Prepare a production budget for May. Prepare the budget in two columns: Dockers^® and 501 Jeans^®. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Two-Leg Company
Production Budget
For Month Ending May 31 (assumed data)
	Dockers	501 Jeans
Expected units to be sold
Total units available
Total units to be produced

b. Prepare the May direct labor cost budget for the four sewing operations, assuming a $12 wage per hour for the inseam and outerseam sewing operations and a $18 wage per hour for the pocket and zipper sewing operations. Prepare the direct labor cost budget in four columns: inseam, outerseam, pockets, and zipper.

Two-Leg Company
Direct Labor Cost Budget
For Month Ending May 31 (assumed data)
	Inseam	Outerseam	Pockets	Zipper	Total
Dockers
501 Jeans
Total minutes
Total direct labor hours
Direct labor rate	x $	x $	x $	x $
Total direct labor cost	$	$	$	$	$

Answer 1

a.

Prepare the production budget as follows:

Two-Leg Company
Production budget
For the month ending May
	Dockers	501 jeans
Sales (units)	21,610	38,720
Add Desired ending inventory	360	1,370
Units required	21,970	40,090
Less Beginning inventory finished goods	-970	-1,090
Projected production units	21,000	39,000

b.

Prepare direct labor cost budget as follows:

Two-Leg Company
Direct Labor Cost Budget
For Month Ending May 31 (assumed data)
	Inseam	Outerseam	Pockets	Zipper	Total
Dockers	21000	21000	21000	21000	21000
Direct labor minutes	21	25	8	12	66
Total minutes	44100	52500	16800	25200	138600
Total direct labor hours	735	875	280	420	2310
Direct labor rate	12	12	18	18
Total direct labor cost	8820	10500	5040	7560	31920

Two-Leg Company
Direct Labor Cost Budget
For Month Ending May 31 (assumed data)
	Inseam	Outerseam	Pockets	Zipper	Total
501Jeans	39000	39000	39000	39000	39000
Direct labor minutes	14	17	10	7	48
Total minutes	54600	66300	39000	27300	187200
Total direct labor hours	910	1105	650	455	3120
Direct labor rate	12	12	18	18
Total direct labor cost	10920	13260	11700	8190	31920