A Budgeting Labor Costs
Deep Valley Foods manufactures a product that is first smoked and then packed for shipment to customers. The product's direct labor cost per pound is budgeted using the following information:
Direct Labor Hours Budgeted Direct Labor
per Pound Cost per Hour
Process:
Smoking................................. .04 $10.00
Packing.................................. .01 8.00
The budget for March calls for the production of 500,000 pounds of product. March's direct labor costs for smoking are expected to be 5% above budget due to anticipated scheduling inefficiencies. However, direct labor costs in the packing room are expected to be 3% below budget because of changes in equipment layout.
Instructions
Prepare a budget for direct labor costs in March. Use three column headings: Total, Smoking, and Packing.