Exercise $23\mathrm{.}2($Static$)$ Budgeting Labor Costs $($LO$23-4,$ LO$23-5)$Exercise $23\mathrm{.}2($Static$)$ Budgeting Labor Costs $($LO$23-4,$ LO$23-5)$

Deep Valley Foods manufactures a product that is first smoked and then packed for shipment to customers. During a normal month

the product's direct labor cost per pound is budgeted using the following information.

The budget for March calls for the production of $500,000$ pounds of product. However, March's direct labor costs for smoking are

expected to be $5$ percent above normal due to anticipated scheduling inefficiencies. Yet direct labor costs in the packing room are

expected to be $4$ percent below normal because of changes in equipment layout.

Prepare a budget for direct labor costs in March using three column headings: Total, Smoking, and Packing.

Answer is complete but not entirely correct.

Deep Valley Foods manufactures a product that is first smoked and then packed for shipment to customers. During a normal month the product$$s direct labor cost per pound is budgeted using the following information.

Direct

Labor Hours

$($per pound$)$ Budgeted Direct

Labor Cost

$($per hour$)$

Process:

Smoking $0\mathrm{.}08$ $$20$

Packing $0\mathrm{.}0612$

The budget for March calls for the production of $500,000$ pounds of product. However, March$$s direct labor costs for smoking are expected to be $5$ percent above normal due to anticipated scheduling inefficiencies. Yet direct labor costs in the packing room are expected to be $4$ percent below normal because of changes in equipment layout.

Prepare a budget for direct labor costs in March using three column headings: Total, Smoking, and Packing.