A business plans to make 15,000 coats per annum, each taking the 1.5 direct labour hours. If the direct labour rate is $8 per hour and a pay rise of 15% is awarded halfway through the year, what is the total annual direct labour budget?
Answers
Answer:
correct answer is 193,500
Explanation:
15,000 x 1.5 hours at $8 = $180,000 pa. The first half of the year will be $90,000 and the second half $90,000x 1.15 = $103,500. Total year = $193,500.
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Given: A business makes 15,000 coats annually. Each coat taking 1.5 labor hours. The direct labor rate is $8.
Find: Calculate the total annual direct labor budget.
Solution:
Total cost= 15,000X1.5X$8
=$1,80,000 p.a.
First half year labor cost=$1,80,000/2
= $90,000
After rising the price by 15%
Second half year labor cost=$90,000X1.15
=$1,03,000
Total budget=$90,000+1,03,000
=$1,93,000.
Final answer: Total annual direct labor budget is $1,93,000.
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