Q2. ABC Corporation is working on its direct labor budget for the next two months. Each unit of output requires 0.40 direct labor-hours. The direct labor rate is SR 9 per direct labor-hour. The production budget calls for producing 2,500 units in January and 2,800 units in February. The company guarantees its direct labor workers at least 960 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.

Q4. What is a flexible budget, and why do companies use a flexible budget to evaluate production managers?

Answer: