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Production and Direct Labor Cost Budgets

Two-Leg Company manufactures slacks and jeans under a variety of brand names, such as Kickers and 101 Denims. Slacks and jeans are assembled by a variety of different sewing operations. Assume that the sales budget for Kickers and 101 Denims shows estimated sales of 30,870 and 65,540 pairs, respectively, for May. The finished goods inventory is assumed as follows:

	Kickers		101 Denims
May 1 estimated inventory	1,380		1,850
May 31 desired inventory	510		2,310

Assume the following direct labor data per 10 pairs of Kickers and 101 Denims for four different sewing operations:

	Direct Labor per 10 Pairs
	Kickers		101 Denims
Inseam	17	minutes	11	minutes
Outerseam	21		14
Pockets	6		8
Zipper	10		6
Total	54	minutes	39	minutes

a. Prepare a production budget for May.

Two-Leg Company
Production Budget
May (assumed data)
	Kickers	101 Denims
Expected units to be sold
Plus May 31 desired inventory
Total units
Less May 1 estimated inventory
Total units to be produced

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b. Prepare the May direct labor cost budget for the four sewing operations, assuming a $10 wage per hour for the inseam and outerseam sewing operations and a $18 wage per hour for the pocket and zipper sewing operations.

Two-Leg Company
Direct Labor Cost Budget
May (assumed data)
	Inseam	Outerseam	Pockets	Zipper	Total
Kickers
101 Denims
Total minutes
Total direct labor hours
Direct labor rate	x $	x $	x $	x $
Total direct labor cost	$	$	$	$	$

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