The LFM Company Makes and Sells a Single Product, Product

question 61

Multiple Choice

The LFM Company makes and sells a single product, Product T. Each unit of Product T requires 1.3 hours of direct labor at a rate of $9.10 per direct labor-hour. LFM Company needs to prepare a Direct Labor Budget for the second quarter of next year.
-The company has budgeted to produce 25,000 units of Product T in June. The finished goods inventories on June 1 and June 30 were budgeted at 500 and 700 units, respectively. Budgeted direct labor costs for June would be:

• A) $293,384
• B) $304,031
• C) $295,750
• D) $227,500

---

Definitions:

Lower of Cost

A principle that dictates inventory and other assets are recorded at the lesser of their historical cost or market value.

Generally Accepted Accounting Principles

A set of widely adhered to accounting principles and standards used in financial reporting.

Fair Value Accounting

An accounting approach where assets and liabilities are recorded at their current market value.

Assets and Liabilities

The resources owned by a company (assets) that provide future economic benefits and the obligations (liabilities) it owes to other entities.