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In: Accounting

Flagstaff Company has budgeted production units of 8,300 for July and 8,500 for August. The direct...

Flagstaff Company has budgeted production units of 8,300 for July and 8,500 for August. The direct labor requirement per unit is 0.50 hours. Labor is paid at the rate of $19 per hour. The total cost of direct labor budgeted for the month of August is:

Multiple Choice

  • $78,850.

  • $4,250.

  • $80,750.

  • $4,150.

  • $159,600.

    Flagstaff Company has budgeted production units of 8,100 for July and 8,300 for August. The direct materials requirement per unit is 2 ounces (oz.). The company requires to have safety stock of direct materials on hand at the end of each month to complete 30% of the units of budgeted production in the following month. There was 4,860 ounces of direct material in inventory at the start of July. The total ounces of direct materials to be purchased in July is:

    Multiple Choice

  • 16,200 oz.

  • 16,600 oz.

  • 21,180 oz.

  • 16,320 oz.

  • 16,080 oz.

Solutions

Expert Solution

Ans. 1 Option   3rd $80,750
Particulars August
Budgeted production (units) 8500
(X) Direct labor hours 0.5
Total labor hours needed 4250
(X) Wages rate per hour $19
Budget direct labor cost $80,750
*Total labor hours needed = units to be produced * direct labor hours
*Budgeted direct labor cost = Total labor hours needed * Wages rate per hour
Ans. 3 Option 4th 16,320 oz.
July
Budgeted production (units) 8,100
Direcct materials (ounces) per unit 2
Direct materials needed for production 16200
Plus : Desired ending inventory 4980
Total direct materials needed 21180
Less: Budgeted beginning inventory -4860
Budgeted purchase of direct materials (oz.) 16320
*Working notes :
*Calculations for direct materials needed in August :
Budgeted production (units) 8,300
Direcct materials (ounces) per unit 2
Direct materials needed for production 16600
*Ending inventory for July = Materials needed in August * 30%
16,600 * 30% - 4,980 ounces
*Beginning inventory for July (given) = 4,860 ounces

ekkarill92 answered 2 years ago
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