Question

In: Accounting

September october November December January sales (units) 8000 12000 13000 16000 15000 Direct manufacturing labours hour...

September october November December January

sales (units) 8000 12000 13000 16000 15000

Direct manufacturing labours

hour per unit 1.79 1.75 1.70 1.65 1.60

Direct manufacturing labour rate per unit $15.75 $16.00 $16.50 $17.50 $17.50

Ending inventory required is the next month sales , plus one half the following months sales

The ending inventory in august was 15000 units

Each employee is required to contributed to canada pension plan in the order of 4.9% of wages, this is matched by the employer

Workers compensation expenses are 1.9% of the wage total

Employment insurance is 1.85% of wages and the employer pays 1.4 times the rate charged to the employee.

Required :

prepare a labour budget showing production requirements, labour hours and costs for the month of october

Expert Solution

1. Production Requirements

Particulars	Aug	Sep	Oct	Nov	Dec	Jan
Opening Inventory		15000	18500	21000	23500
+ Purchase		11500	14500	15500
- Closing Inventory	15000	18500	21000	23500

= Sales		8000	12000	13000	16000	15000

Note: Closing Inventory for month of October is 13000 + ½ of 16000 = 21000 and Purchase is the balancing figure

2. Labour Hours

Labour hour require per unit for the month of October is 1.75

Direct Labour Hours = 14500 units * 1.75

=25375 Hours

3. Labour Cost for month of October

Particulars	Amount (in $)
Direct Labour Wages (14500 units*16)	232000
Employer Contribution to Canada Pension Plan (232000*4.9%)	11368
Employment Insurance(232000*1.9%)	4408

Total Labour Cost for month of October	247776

ekkarill92 answered 2 years ago

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