Johnston Company has budgeted production of 11,600 units and sales of 14,400 units in February. Each unit requires 15 minutes of labor. The standard labor rate is $15.00 per hour. How much are total budgeted direct labor costs for February?

$43,500

Explanation:

Direct labor costs refer to the salaries that are paid to the employees that perform a job that is related to the production of a good. In this case, it would be the wages of the employees that work in the production of the units budgeted.

To calculate the total cost, first you have to calculate the amount of hours require to produce 11,600 units:

      1 unit        →  15 minutes

11,600 units    →          x

x=(11,600*15)/1= 174,000 minutes

1 hour →   60 minutes

    x    ←    174,000 minutes

x=(1*174,000)/60= 2,900 hours

Now, you can calculate  the total budgeted direct labor costs by multiplying the labor rate per hour for the number of hours needed to manufacture the units budgeted:

$15*2,900= $43,500

According to this, the answer is that the total budgeted direct labor costs for February is $43,500.

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