The Direct Labor Budget At Royal, each unit of product requires 0.05 hours (3 minutes) of direct labor. The Company has a no layoff policy so all employees will be paid for 40 hours of work each week. 2. Fab Manufacturing Corporation expected mug sales at Fab (in units) for the next three months are : Fab likes to maintain a finished goods inventory equal to 30% of the next month's estimated sales. How many mugs should Fab plan on producing during the month of November? A. 23,200 mugs B. 26,800 mugs C. 25,900 mugs D. 34,300 mugs

For purposes of our illustration assume that Royal has a no layoff policy, workers are paid at the rate of $10 per hour regardless of the hours worked. For the next three months, the direct labor workforce will be paid for a minimum of 1,500 hours per month. Lets prepare the direct labor budget. Month April May June Quarter 2 Units of production direct labor per unit labor hours required Guaranteed labor hours Labor hours paid Hourly wage rate Total direct labor cost