Production and Direct Labor Cost Budgets
Two-Leg Company manufactures slacks and jeans under a variety ofbrand names, such as Dockers® and 501 Jeans®.Slacks and jeans are assembled by a variety of different sewingoperations. Assume that the sales budget for Dockers and 501 Jeansshows estimated sales of 21,610 and 38,720 pairs, respectively, forMay. The finished goods inventory is assumed as follows:
| Dockers | 501 Jeans |
| May 1 estimated inventory | 970 | | 1,090 | |
| May 31 desired inventory | 360 | | 1,370 | |
Assume the following direct labor data per 10 pairs of Dockersand 501 Jeans for four different sewing operations:
| Direct Labor per 10 Pairs | |
| Dockers | 501 Jeans |
| Inseam | 21 | minutes | 14 | minutes |
| Outerseam | 25 | | 17 | |
| Pockets | 8 | | 10 | |
| Zipper | 12 | | 7 | |
| Total | 66 | minutes | 48 | minutes |
a. Prepare a production budget for May. Preparethe budget in two columns: Dockers® and 501Jeans®. For those boxes in which you must entersubtracted or negative numbers use a minus sign.
| Two-Leg Company |
| Production Budget |
| For Month Ending May 31 (assumed data) |
| Dockers | 501 Jeans |
| Expected units to be sold | | |
| | |
| Total units available | | |
| | |
| Total units to be produced | | |
b. Prepare the May direct labor cost budget forthe four sewing operations, assuming a $12 wage per hour for theinseam and outerseam sewing operations and a $18 wage per hour forthe pocket and zipper sewing operations. Prepare the direct laborcost budget in four columns: inseam, outerseam, pockets, andzipper.
| Two-Leg Company |
| Direct Labor Cost Budget |
| For Month Ending May 31 (assumed data) |
| Inseam | Outerseam | Pockets | Zipper | Total |
| Dockers | | | | | |
| 501 Jeans | | | | | |
| Total minutes | | | | | |
| Total direct labor hours | | | | | |
| Direct labor rate | x $ | x $ | x $ | x $ | |
| Total direct labor cost | $ | $ | $ | $ | $ |
