Vargas Corporation Is Working on Its Direct Labor Budget for the Next

question 65

Multiple Choice

Vargas Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.77 direct labor-hours. The direct labor rate is $11.20 per direct labor-hour. The production budget calls for producing 7,100 units in October and 6,900 units in November. The company guarantees its direct labor workers a 40-hour paid work week. With the number of workers currently employed, that means that the company is committed to paying its direct labor work force for at least 5,480 hours in total each month even if there is not enough work to keep them busy. What would be the total combined direct labor cost for the two months?

• A) $122,752.00.
• B) $120,736.00.
• C) $120,881.60.
• D) $122,606.40.

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Definitions:

Purchasing Power

The worth of currency represented by the quantity of goods or services that can be purchased with a single unit of money.

Price Support Program

Government interventions to maintain the market price of a commodity at a certain level to benefit producers.

Wheat Farmers

Individuals or entities engaged in the cultivation and production of wheat as a crop.

Government

The organized system of institutions, laws, and officials that establish and administer public policies and functions within a society.