Question

Alleyway Corp. manufactures two styles of leather bowling bag, the Strike and Turkey. Budgeted production levels for October follow: 

$$ \begin{array}{lll}  & \text { Strike } & \text { Turkey } \\ \text { Production } & 2,900 \text { bags } & 3,250 \text { bags } \end{array} $$

Two departments, Cutting and Sewing, produce the bowling bags. Direct labor hours needed for each style are as follows:

$$ \begin{array}{lcr}  & \text { Cutting } &  {\text { Sewing }} \\ \text { Strike } & 0.05 \text { hour per bag } & 0.25 \text { hour per bag } \\ \text { Turkey } & 0.15 \text { hour per bag } & 0.5 \text { hour per bag } \end{array} $$

Hourly direct labor rates are $12 for the Cutting Department and $14 for Sewing. Required: Determine Alleyway's budgeted direct labor cost for October. (Round your final answers to nearest whole dollar. Do not round your intermediate calculations.)

 Budgeted Direct Labor Cost

Answer 1

(1)

For Cutting,

budgeted direct labor cost = direct labor cost for Strike bags + direct labor cost for Turkey bags

direct labor cost for Strike bags = (total production units x labour hours per unit) x direct labor rate per hour

= 2900 x 0.05 x $12 = $1740

direct labor cost for Turkey bags

= 3250 x 0.15 x $12 = $5850

therefore,

budgeted direct labor cost for cutting department = $7590

(2)

For Sewing,

budgeted direct labor cost = direct labor cost for Strike bags + direct labor cost for Turkey bags

direct labor cost for Strike bags = (total production units x labour hours per unit) x direct labor rate per hour

= 2900 x 0.25 x $14 = $10150

direct labor cost for Turkey bags

= 3250 x 0.5 x $14 = $22750

therefore,

budgeted direct labor cost for sewing department = $32900