Page Corporation produces and sells powdered lemon mix in tetra packs. The product sells for P25 per pack. Page plans to sell 50,000 packs of lemon mix next month. Due to lack of storage space the company keeps a negligible amount of finished goods inventory. To produce a pack of powdered lemon mix, two hours of direct labor is required. At present, the company pays its factory workers an average hourly rate of P20. A new wage bill is being passed in Congress requiring a 20% increase in wage, and it is expected to be signed into law in five months time. Page computes its factory overhead based on direct labor hours. On the average, it incurs variable overhead rate of P4.50 per hour. The annual fixed overhead budget is P360,000, which is incurred uniformly throughout the year. 

Required:

a. Compute Page's Direct Labor Cost Budget for the coming month. 

b. Determine the budgeted amount of factory overhead for the next month's production.

Answer rating: 100% (QA)

Direct Labor Budget Units to be sold Number of hours required per ... View the full answer