Becker B2: CPA-04022

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  • #188802
    Anonymous
    Inactive

    Becker Question –

    Jordan Auto has developed the following production plan.

    Month Units

    January 10,000

    February 8,000

    March 9,000

    April 12,000

    Each unit contains three pounds of raw material. The desired raw material ending inventory each month is 120 percent of the next month’s production, plus 500 pounds. (The beginning inventory meets this requirement.) Jordan has developed the following direct labor standards for production of these units.

    Department 1 Department 2

    Hours per unit 2.0 0.5

    Hourly rate $6.75 $12.00

    Jordan Auto’s total budgeted direct labor dollars for February usage should be:

    a. $156,000

    b. $210,600

    c. $175,500

    d. $165,750

    Explanation

    Choice “a” is correct. $156,000 budgeted direct labor dollars for February, calculated as follows:

    8,000 units × 2.0 hrs × $6.75 = $ 108,000

    8,000 units × 0.5 hrs × $12.00 = 48,000

    Total budgeted direct labor dollars for February $ 156,000

    My Question:

    Why are there two departments? How are we supposed to know the number of tables produced in each department?

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  • #609595
    leglock
    Participant

    It's basically telling you that a table has to pass through 2 depts to be completed and it tells you the labor hours needed for one table to be completed in each dept, but both depts are needed to complete one table. Think of a wooden chair that may have to pass through the assembly department and then the varnishing dept. in order to become a finished good.

    In essence they directly gave you the units produced which needs to be multiplied by the total labor hours (dept 1 plus dept 2) x each respective rate.

    #609596
    Anonymous
    Inactive

    @leglock Thanks. I'm picturing it as department one developed the table top and department two attached the legs. Thanks again.

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