Production and Direct Labor Cost Budgets

Two-Leg Company 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 37,050 and 68,510 pairs, respectively, for May. The finished goods inventory is assumed as follows:

	Dockers		501 Jeans
May 1 estimated inventory	1,660		1,930
May 31 desired inventory	610		2,420

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	17	minutes	11	minutes
Outerseam	21		14
Pockets	6		8
Zipper	10		6
Total	54	minutes	39	minutes

a. Prepare a production budget for May. Prepare the budget in two columns: Dockers and 501 Jeans. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Two-Leg Company
Production Budget
For Month Ending May 31 (assumed data)
	Dockers	501 Jeans
Expected units to be sold
May 31 desired inventory
Total units available
May 1 estimated inventory
Total units to be produced

Feedback

Remember to take into account expected units to be sold, desired units in ending inventory and estimated units in beginning inventory when calculating total units to be produced.

Learning Objective 4.

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 $19 wage per hour for the pocket and zipper sewing operations. Prepare the direct labor cost budget in four columns: inseam, outerseam, pockets, and zipper.

Two-Leg Company
Direct Labor Cost Budget
For Month Ending May 31 (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	$	$	$	$	$