Direct Labor Budgeting
Response to the following problem:
Sanford Shoe Company makes three shoe styles: loafers, work boots, and tennis shoes. The production budget for the next three months for each type of shoe is
Loafers Work Boots Tennis Shoes
January 2,900 5,400 3,160
February 3,100 6,000 5,400
March 2,750 6,600 4,300
From experience, Sanford's management knows that it takes 15 minutes of direct labor to make a pair of loafers, 20 minutes to make a pair of work boots, and 12 minutes to make a pair of tennis shoes. At Sanford, direct labor employees are paid $10 per hour.
Prepare a direct labor budget in both hours and costs for each of the three months.