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

question 24

Essay

Kouba Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.23 direct labor-hours. The direct labor rate is $11.20 per direct labor-hour. The production budget calls for producing 4,000 units in April and 3,400 units in May. 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 920 hours in total each month even if there is not enough work to keep them busy.
Required:
Construct the direct labor budget for the next two months.

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Definitions:

Allowance Method

An accounting technique that estimates and sets aside a portion of accounts receivable that may not be collectible, reflecting potential losses.

Credit Sales

Sales in which the payment is deferred to a future date, typically allowing the buyer to receive goods or services immediately but pay later.

Promissory Note

A financial instrument involving a written promise by one party to pay another party a definite sum of money either on demand or at a specified future date.

Maker

An individual or entity that creates or issues a financial instrument, such as a check or note, thereby promising to pay the amount stated.