Production and Direct Labor Cost Budgets

Levi Strauss & Co. manufactures slacks and jeans under a variety of brand names, such as Dockers and 501 Jeans. Slacks and jeans are assembled by a variety of different sewing operations. Assume that the sales budget for Dockers and 501 Jeans shows estimated sales of 23,600 and 53,100 pairs, respectively, for May 2016. The finished goods inventory is assumed as follows:

	Dockers		501 Jeans
May 1 estimated inventory	670		1,660
May 31 desired inventory	420		1,860

Assume the following direct labor data per 10 pairs of Dockers and 501 Jeans for four different sewing operations:

	Direct Labor per 10 Pairs
	Dockers		501 Jeans
Inseam	18	minutes	9	minutes
Outerseam	20		14
Pockets	6		9
Zipper	12		6
Total	56	minutes	38	minutes

a. Prepare a production budget for May.

Levi Strauss and Co.
Production Budget
May 2016 (assumed data)
	Dockers	501 Jeans
Expected units to be sold
Plus May 31 desired inventory
Total units
Less May 1 estimated inventory
Total units to be produced

b. Prepare the May direct labor cost budget for the four sewing operations, assuming a $13 wage per hour for the inseam and outerseam sewing operations and a $15 wage per hour for the pocket and zipper sewing operations.

Levi Strauss and Co.
Direct Labor Cost Budget
May 2016 (assumed data)
	Inseam	Outerseam	Pockets	Zipper	Total
Dockers
501 Jeans
Total minutes
Total direct labor hours
Direct labor rate	x $	x $	x $	x $
Total direct labor cost	$	$	$	$	$