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Deep Valley Foods manufactures a product that is first smoked and then packed for shipment to customers. During a normal month the product's direct labor

Deep Valley Foods manufactures a product that is first smoked and then packed for shipment to customers. During a normal month the product's direct labor cost per pound is budgeted using the following information:

Direct

Labor Hours

(per pound)

Budgeted Direct

Labor Cost

(per hour)

Process:

Smoking

0.05

$

16

Packing

0.02

9

The budget for March calls for the production of 400,000 pounds of product. However, Marchs direct labor costs for smoking are expected to be 6 percent above normal due to anticipated scheduling inefficiencies. Yet direct labor costs in the packing room are expected to be 2 percent below normal because of changes in equipment layout.

Prepare a budget for direct labor costs in March using three column headings: Total, Smoking, and Packing.

DEEP VALLEY FOODS

Budget for Direct Labor Costs

For the Month Ended March 31st

Total

Smoking

Packing

Smoking

Packing

Totals

sheet is drawn here

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