The company has a no layoff policy so all employees

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The Company has a “no layoff” policy so all employees will be paid for 40 hours of work each week. For purposes of our illustration assume that Royal has a “no layoff” policy, workers are paid at the rate of $10 per hour regardless of the hours worked. For the next three months, the direct labor workforce will be paid for a minimum of 1,500 hours per month. Let’s prepare the direct labor budget.
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8-35 The Direct Labor Budget From production budget.
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8-36 The Direct Labor Budget
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8-37 The Direct Labor Budget Greater of labor hours required or labor hours guaranteed.
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8-38 The Direct Labor Budget
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8-39 Manufacturing Overhead Budget At Royal, manufacturing overhead is applied to units of product on the basis of direct labor hours. The variable manufacturing overhead rate is $20 per direct labor hour. Fixed manufacturing overhead is $50,000 per month, which includes $20,000 of noncash costs (primarily depreciation of plant assets). Let’s prepare the manufacturing overhead budget.
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8-40 Manufacturing Overhead Budget Direct Labor Budget.
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8-41 Manufacturing Overhead Budget Total mfg. OH for quarter $251,000 Total labor hours required 5,050 = $49.70 per hour * * rounded
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8-42 Manufacturing Overhead Budget Depreciation is a noncash charge.
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8-43 Production costs per unit Quantity Cost Total Direct materials 5.00 lbs. 0.40 $ 2.00 $ Direct labor 0.05 hrs. 10.00 $ 0.50 Manufacturing overhead 0.05 hrs. 49.70 $ 2.49 4.99 $ Budgeted finished goods inventory Ending inventory in units 5,000 Unit product cost 4.99 $ Ending finished goods inventory 24,950 $ Ending Finished Goods Inventory  Budget Direct materials budget and information.
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8-44 Production costs per unit Quantity Cost Total Direct materials 5.00 lbs. 0.40 $ 2.00 $ Direct labor 0.05 hrs. 10.00 $ 0.50 Manufacturing overhead 0.05 hrs. 49.70 $ 2.49 4.99 $ Budgeted finished goods inventory Ending inventory in units 5,000 Unit product cost 4.99 $ Ending finished goods inventory 24,950 $ Ending Finished Goods Inventory  Budget Direct labor budget.
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8-45 Production costs per unit Quantity Cost Total Direct materials 5.00 lbs. 0.40 $ 2.00 $ Direct labor 0.05 hrs. 10.00 $ 0.50 Manufacturing overhead 0.05 hrs. 49.70 $ 2.49 4.99 $ Budgeted finished goods inventory Ending inventory in units 5,000 Unit product cost 4.99 $ Ending finished goods inventory ? Ending Finished Goods Inventory  Budget Total mfg. OH for quarter $251,000 Total labor hours required 5,050 = $49.70 per hour
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8-46 Production costs per unit Quantity Cost Total Direct materials 5.00 lbs. 0.40 $ 2.00 $ Direct labor 0.05 hrs. 10.00 $ 0.50 Manufacturing overhead 0.05 hrs. 49.70 $ 2.49 4.99 $ Budgeted finished goods inventory Ending inventory in units 5,000 Unit product cost 4.99 $ Ending finished goods inventory 24,950 $ Ending Finished Goods Inventory  Budget Production Budget.
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8-47 Selling and Administrative Expense  Budget At Royal, the selling and administrative expense budget is divided into variable and fixed components.
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